Ratings agency Moody's Investors Service today shifted SA's debt rating outlook to negative, and identified political instability and policy uncertainty as the main factors in the increase in our risk profile.

This, according to the Democratic Alliance (DA), would unfortunately further erode confidence in SA's economy, and could force government to pay higher interest rates on its debts in future.

"This means that fewer resources will be available for improving the lives of our people," the DA's Spokesperson on Finance Dion George said.

"The Zuma administration's failure to provide clarity on the nationalisation of mines, the failure to provide a credible and coherent macro-economic growth strategy, the hostility shown towards prospective investors such as Wal-Mart, the inability to curtail government waste and the tendency in government to place tripartite alliance politics above the national interest do not inspire confidence."

George said government should be doing all that it could to demonstrate to investors that SA was open for business.

Rather it was increasing the country's risk profile and placing a growing economic burden on the South African people.

"If we are to improve SA's debt rating outlook, we must work to create a stable and predictable policy environment that encourages long-term investment and growth."

Over the coming months, George said that the DA would be engaging in a policy project designed to identify what SA needed to do in order to achieve 8% economic growth.

"It is only by stimulating accelerated economic growth and creating an enabling environment for job creation that we will be able to create opportunities for all South Africans. "

Earlier, Moody's said it had changed the outlook on SA's A3 local- and foreign-currency government debt ratings to negative from stable, reflecting heightened political risk in the context of more constrained public finances.

The negative outlook also applied to the country's A1 foreign-currency debt ceiling and its A3 foreign-currency deposit ceiling.

Moody's said the main drivers for the negative outlook included the growing risk that the political commitment to low budget deficits and the ability to keep within current debt targets could be undermined by popular pressures and rising internal strains within the African National Congress (ANC) party, and between the ANC and its partners in the Tripartite Alliance (the Congress of South African Trade Unions (Cosatu) and the Communist Party).

Furthermore, expectations that growth would be somewhat slower than previously expected and limited to roughly 3%-3.5% over the medium term, which was insufficient to prevent already high unemployment rates from increasing further, thereby exacerbating social tensions.

Also, Moody's said that there had been continued negative impact on private investment deriving from calls for interventionist actions aimed at "quick fixes" for black economic opportunities.