Prudent macroeconomic policies and a moderate debt burden. An independent central bank committed to low inflation, and well-developed capital markets and a strong financial sector. Political stability and transparent institutions. Structural economic weaknesses and deep social inequalities. Vulnerability to volatile capital inflows. The ratings on South Africa are supported by the sovereign's prudent macroeconomic policies, a moderate debt burden, and strong and stable political institutions. These factors are balanced by strengthened but still relatively vulnerable external finances and the economy's severe structural socioeconomic weaknesses. Consistently prudent macroeconomic policies have succeeded in reducing the fiscal deficit, stabilizing debt levels, and lowering inflation and interest rates. By 2005, the sound track record of macroeconomic stability and economic management had created the favorable
