Moody’s says South Africa on track to stabilise debt this year

South African government debt is still on track to have peaked despite the Iran war, Moody’s Ratings said in a new report that endorsed the nation’s focus on reform and prudent public finances.

“Improving fiscal performance and steady reform momentum support our view that government debt will stabilise this year before gradually declining,” the ratings agency said in a note on Wednesday.

“This credit-positive shift is supported by stronger revenue, greater spending restraint and improving funding costs.”

Investors warmed to South African assets following better-than-expected news from its February budget and after it won an upgrade from S&P Global Ratings, which lifted its credit assessment for the first time in two decades to BB with a positive outlook.

Moody’s rates South Africa at Ba2 with a stable outlook, which it is expected to review later this month.

The agency saw South Africa’s debt peaking at 86.8% of gross domestic product