Moody’s upgraded South Africa’s rating from stable, to positive outlook.
The rating agency said this positive outlook reflects South Africa’s gradually strengthening fiscal performance and sustained commitment to structural reforms, with prospects of increasingly tangible results.
Evan Wohlmann, Senior Credit Officer at Moody’s, said in a report, “we expect a rising primary surplus and gradually improving debt-service costs to stabilise the general government debt burden in the near term. The better fiscal outlook for South Africa is still at an early stage but continued improvements could support a shift to a clear downward trajectory in debt and debt-service costs. We expect stronger investment, supported by ongoing reforms, to gradually raise real GDP growth to around 2% by 2028 and underpin fiscal improvements.”
South Africa still has a relatively weak fiscal and economic fundamentals, with fiscal and economic reform-related improvements still at an early stage.
The country also has low growth potential, constrained by a weak labour market and fragile, albeit improving, state of network infrastructure, balanced by a flexible exchange rate, low foreign-currency external debt, and robust core institutions.
South Africa’s local- and foreign-currency country ceilings remain unchanged at Baa1 and Baa2, respectively.
South Africa’s primary budget surplus was larger than expected in the 2025 fiscal year (ending March 2026), which is estimated at around 1% of GDP, benefitting from strong, broad-based revenue growth alongside continued credible spending restraint. This follows a track record of primary surpluses since 2022.
Picture: Supplied