Standard&Poor's Ratings Services' ratings on South Africa are supported by our view of broad policy continuity under President Zuma's administration. Its still moderate, albeit growing, fiscal and external debt affords South Africa some flexibility. We also consider that deep debt markets enhance monetary flexibility. The ratings are constrained by South Africa's many development needs and social challenges, which we think are increasing political pressures and may heighten fiscal spending pressures. The ratings are also constrained by increasing current account deficits, the funding of which depends significantly on potentially volatile portfolio flows. This could expose the economy to a sudden shift of capital flows due to changes in global risk appetite, or to rapid market sanctions in the event
