Standard&Poor's Ratings Services' ratings on South Africa are supported by our view of the country's stable political environment and transparent institutions. Its moderate fiscal and external debt afford South Africa fiscal and monetary flexibility, as seen in the country's successful use of macroeconomic policies to cushion the burden of the recent global economic downturn. We also consider that deepening debt markets enhance monetary flexibility. The ratings are constrained by South Africa's multiple development needs and social challenges, which we think may have long-term ramifications for policy and may raise fiscal expenditure pressures. Supply shortages--including infrastructure bottlenecks and labor market rigidity and skill shortages--constrain South Africa's growth potential. The ratings are also constrained by continuous current account deficits, the
