Thebe Mabanga
S&P has affirmed South Africa credit rating, praising the country’s credit reforms, debt stabilisation and revenue collection despite a poor growth outlook for the medium term. The ratings update was released on Friday night.
“Government notes the decision by S&P Global Ratings to affirm South Africa’s long-term foreign currency sovereign credit rating at ‘BB’ and local currency rating at ‘BB+’, and to maintain the positive outlook,” Treasury said in a statement.
The country remains in sub-investment grade, or junk status.
The affirmation comes after Moody’s last week moved South Africa’s outlook from stable to positive and S&P upgraded South Africa’s ratings in November last year. This was the first upgrade in 16 years.
S&P says it expects South Africa’s real GDP growth to rise slightly to 1.2 percent in 2026 and average 1.7 percent between 2027 and 2029. This is as reforms to electricity, logistics, water and local government take root and support growth.
S&P noted South Africa’s third consecutive fiscal year of rising primary surpluses.
Given improving tax collection and expenditure restraint, S&P expects fiscal consolidation to continue through 2029/30, leading to a decline in government debt as a percentage of GDP, treasury said.
It said the positive outlook reflects scope for further fiscal improvement and debt stabilisation. However, this is dependent on continued consolidation and an easing of the current energy price shock sparked by war in the Middle East and the disruption caused by the closure of the Strait of Hormuz.
“The rating decision also recognises stronger revenue performance, which has enabled the government to maintain fiscal discipline while implementing targeted measures to protect vulnerable households, including the temporary fuel levy relief in response to elevated global energy prices,” Treasury said.
“The government remains committed to maintaining prudent fiscal policy, strengthening the credibility of the fiscal framework, and accelerating reforms that support higher growth, job creation, and improved service delivery.”
“The affirmation from S&P that government is on track to deliver on its commitment to reduce the debt to GDP ratio over the medium term reflects the progress we have made towards restoring the health of South Africa’s public finances, and our ability to continue to do so despite geopolitical upheavals.”
Duncan Pieterse, the Director-General of the National Treasury, said of the ratings update: “Two of the major rating agencies, S&P and Moody’s, now have South Africa on a positive outlook, which is an encouraging signal that we have the potential to lift our economic growth rate higher and reduce our public debt faster. We are determined to do so.”
Treasury says South Africa is one of two countries in the G20, alongside Italy, to have a positive outlook since the outbreak of war in Iran at the end of February, while it’s the only G20 economy with a positive outlook from Moody’s in that period.
INSIDE POLITICS
