Today's statement was the first time that officials said Nelson Mandela is suffering from pneumonia.
South African presidential spokesman Mac Maharaj said the former president had fluid on the lung caused by pneumonia, by he was now breathing more easily because the liquid had been "tapped".
Previous statements said he had been suffering from a lung infection.
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The chancellor now faces the prospect of forming a minority government or calling for a snap election.
The 73-year-old said a return is unlikely "given the politicised atmosphere that seems to have afflicted our set."
Chancellor Philip Hammond said the UK will make a financial proposal to the EU in the next three-and-a-half weeks.