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 conditions to lift and sustain higher growth rates in the medium term. GDP growth is projected at an annual average of 4.0% in 2004-2008 compared with 3.3% in 1999-2003. The inflation outlook remains benign, with inflation set to stay within the official
