Fitch keeps South Africa’s debt ratings stable

Fitch Ratings has affirmed South Africa’s long-term foreign and local currency debt ratings at ‘BB-’ and maintained a stable outlook.

The ratings agency said South Africa’s rating is constrained by numerous factors, including:

  • Low real GDP growth hampered by power shortages.
  • High levels of inequality.
  • A high government debt-to-GDP ratio.
  • A modest path of fiscal consolidation.

“The ratings are supported by a favourable debt structure with long maturities denominated mostly in local currency and a credible monetary policy framework,” Fitch said.

It forecasted zero real GDP growth in 2023, against 1.9% growth in 2022, due to severe power shortages in recent months that are likely to weigh heavily on GDP.

This should be followed by a modest recovery to 0.9% growth in 2024 and 1.3% in 2025.

Strong investment in power generation after the deregulation of the sector should moderately improve energy supply from 2024 and support the recovery.

However, real GDP growth will remain constrained by a poorly functioning transportation sector that drags on exports.

Commenting on the Fitch announcement, National Treasury said the country is implementing urgent measures to reduce load-shedding in the short term.

It is also transforming the South African electricity sector through market reforms to achieve long-term energy security.

“Over the medium‐term, the fiscal strategy aims to achieve fiscal sustainability by reducing the budget deficit and stabilising the debt-to-GDP ratio,” National Treasury said.

“On‐budget allocations for infrastructure and other policy priorities and maintaining a sustainable fiscal stance will support economic growth.”


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