The rating reflects South Africa's prudent macroeconomic policies, a moderate (albeit rising) debt burden, and stable political institutions. These are balanced by the country's continued high reliance on external portfolio inflows in the context of a significant current account deficit, and severe structural socioeconomic weaknesses. Against the background of economic recession, a large revenue shortfall has formed during 2009, which we anticipate will be the main factor leading to a much higher than expected 8% of GDP deficit in fiscal 2009/2010 (ending in March), compared with an initial budget of 4%. In view of the downturn, the Treasury is letting automatic stabilizers take effect on the revenue side. In parallel, the wider public sector is frontloading investment spending to counter
