The appointment of C. Ramaphosa to the presidency already had some positive effects on financial conditions. The ZAR has appreciated by +18% from its November low. Last year, political uncertainty delayed the recovery that improving external conditions should have triggered (e.g. rising metal prices and global capital flows). South Africa’s fundamentals also improved. The current account deficit has narrowed from -5.9% of GDP in 2013 and is forecast at -2% in 2018. Core inflation eased to +4.1% y/y in January, the lowest level in six years. There is now some confidence that public debt will be stabilized sooner or later. The announced increase in the sales tax from 14% to 15% is a first step to reduce the fiscal deficit (forecast at -4.5% of GDP in 2018). The new fiscal approach is welcomed and should trigger more easing from the Central Bank. We expect the policy interest rate to be reduced by

-100bp from currently 6.75% until year-end. The restructuring of indebted SOEs is another angle to limit the increase of public debt. On this topic, words should also be followed by deeds.