Positive news about South Africa

Moody’s Ratings revised South Africa’s credit outlook to positive, citing the country’s improving fiscal position and commitment to reforms.

The credit assessor changed the outlook to positive from stable and kept the nation’s rating at Ba2, two levels below investment grade, according to a Friday statement.

“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,“ analysts Evan Wohlmann and Lucie Villa wrote.

The outlook revision brings Africa’s largest economy closer to a credit-rating upgrade and underscores its commitment to fiscal consolidation as the country grapples with inflationary pressures from the Iran war, sluggish growth and a heavy debt burden.

The National Treasury expects South Africa’s debt-to-gross domestic product ratio to have stabilised in the year ended March 2026 after rising for nearly two decades, while posting a third consecutive primary budget surplus, where revenue exceeds non-interest expenditure.

“We continue to focus on our two fiscal objectives of ensuring that revenue continues to be ever higher than non-interest spending and maintaining a debt to GDP ratio that comes down from the current year onwards,” Director General of the National Treasury Duncan Pieterse said in an emailed statement after the Moody’s announcement.

“We plan to embed the fiscal turnaround with the introduction of a fiscal anchor for South Africa,” Pieterse added, a reference to government plans to introduce binding guidelines to keep finances on a sustainable path.

The Moody’s outlook change follows a one-notch upgrade by S&P Global Ratings in November to BB, two steps below investment grade. S&P retained its positive outlook.