South Africa Says Will Strengthen Fiscal Framework

South Africa will use its annual budget next year to outline “decisive” policy to strengthen its fiscal framework, the finance ministry said on Saturday after S&P Global Ratings cut its local currency debt to “junk” status.

“The 2018 budget will outline decisive and specific policy measures to strengthen the fiscal framework,” the finance ministry said in a statement, without giving more detail, Reuters reported.

S&P announced the downgrade on Friday, citing a further deterioration in the country’s economic outlook and public finances, and Moody’s placed South Africa on review for a downgrade.

“Weak GDP growth has led to further deterioration of South Africa’s public finances beyond our previous expectations,” S&P said. “In our view, economic decisions in recent years have largely focused on the distribution—rather than the growth—of national income,” it added. “As a consequence, South Africa’s economy has stagnated and external competitiveness has eroded.”

The downgrade by S&P comes after Finance Minister Malusi Gigaba shocked markets on Oct. 25 by flagging sharply weaker growth expectations, a wider budget deficit and rising government debt.

The government has since appointed a judicial commission of inquiry into the causes of a 50 billion rand ($3.6 billion) revenue shortfall and to investigate a possible erosion into the nation’s revenue collection capability.

Economic growth has slowed to near zero in recent years and business and consumer sentiment have plumbed multi-decade lows as political uncertainty weighs on Africa’s most industrialized economy.

Infighting within the ruling African National Congress ahead of a conference in December to elect a successor to President Jacob Zuma as party chief has also sapped investor confidence.

“Restoring business and consumer confidence, and catalyzing inclusive growth is the top priority of government,” the finance ministry said.