JOHANNESBURG, Sept 13 (Reuters) – South Africa’s National Treasury said on Friday its plan to reduce expenditure and raise revenue, while implementing critical reforms, was in progress after credit rating agency Fitch affirmed its debt rating at “BB-” with a stable outlook.

Fitch said that key drivers affecting its decision to keep South Africa below investment grade include the country’s high debt-to-GDP ratio, low growth and high levels of inequality.

The ratings agency said that the formation of a government of national unity (GNU) after the May. 29 general elections lowers short term uncertainty and that the reform programme could contribute to modestly increasing real GDP growth.

Fitch acknowledged the marked improvement in power utility Eskom’s performance this year, but highlighted that ongoing challenges at state logistics group Transnet continue to constrain growth.

South Africa’s National Treasury said in response that the government would continue to implement ‘Operation Vulindlela’, a programme aimed at accelerating reforms in network industries.

“Extensive reforms in energy, freight, water, and telecommunications are also in progress,” it said in a statement.

The Treasury also said that fiscal consolidation efforts would continue and further steps to reduce borrowing over the medium term were being taken.

(Reporting by Kopano Gumbi; Editing by Elaine Hardcastle)