Standard & Poor’s (S&P’s) March decision to sustain a negative outlook on South Africa’s ratings was based substantially on “nondelivery” across a broad range of social and economic challenges, MD Konrad Reuss has reported.

The negative outlook suggested there was a one-in-three chance of South Africa experiencing another downgrade in the coming two years, senior director for sovereign ratings Christian Esters added.

S&P’s downgraded the country in October last year, but on March 12 affirmed South Africa’s long- and short-term foreign currency sovereign credit ratings at BBB/A-2 and also held its local currency ratings and the country’s national scale ratings.

The decision to sustain the rating was based on the likelihood of pol- icy continuity and gradual fiscal consolidation, despite higher near-term fiscal deficits and lower-than-projected economic growth.

However, the outlook was marred by a rising current account deficit, which breached 6% of gross domestic product in 2012, which had heightened South Africa’s dependence on external financing.

There was also the potential for a recurrence during 2013 of some the recent labour tensions that had boiled over in the mining, transport and farming sectors in the recent past, which “could affect South Africa’s macroeconomic policy framework beyond our current expectations”.

The National Treasury criticised the assessment, suggesting that it “did not take adequate account of the positive developments over the past six months”, including the adoption of the National Develop- ment Plan (NDP) at the African National Congress’s national elective conference in Mangaung in December.

“Government’s programmes are geared towards addressing the challenges of poverty and unemployment the country is facing. The NDP, on which the 2013 Budget is premised, identifies the key constraints to faster growth and presents a roadmap to a more inclusive economy that will address South Africa’s socioeconomic imbalances,” the National Treasury said in a statement.

But Reuss argued that there was a need for government to demonstrate that it was, in fact, able to close the persistent gap between development planning and actual delivery.

“Non-delivery” in the areas of education, security, social housing and municipal services was underpinning the negative outlook. “The NDP, in many ways, wants to deal with all these non-delivery issues. The next big question is: Can the national plan deliver?”