South Africa secured on Friday (14) its first credit rating upgrade in nearly 20 years, after S&P Global raised the country’s long-term foreign currency sovereign rating from “BB-” to “BB,” citing stronger growth prospects, improved fiscal forecasts, and reduced contingent liabilities following better performance by the state-owned power company Eskom.
The National Treasury has been working to curb rising debt and restore fiscal credibility, putting the country back on a growth path.
A recent mid-term budget review showed debt-to-GDP stabilizing at 77.9% in this fiscal year and the budget deficit falling to 4.7% of GDP in 2025-26, down from 4.8% in the May budget. State entities in the cargo logistics and energy sectors also showed improvements as the country’s reform agenda gains momentum.
S&P stated in a release that it expects South Africa’s GDP growth to increase to 1.1% in 2025, after a weak 0.5% in 2024, and average 1.5% between 2026 and 2028, as the electricity and other sectors support growth. Tax revenue exceeded budget targets at the start of the 2025 fiscal year, and the agency anticipates consecutive years of primary surpluses and continued fiscal consolidation through 2028.
South Africa is now two notches below investment grade in the foreign currency rating. Africa’s most industrialized economy was first downgraded to “junk” in 2017 following the dismissal of Finance Minister Pravin Gordhan by then-President Jacob Zuma and the resulting political instability. S&P confirmed the country’s outlook as “positive.”
Source: Reuters
