South Africa on Friday secured its first credit rating upgrade in nearly 20 years after S&P Global raised the country’s foreign-currency long-term sovereign rating to “BB” from “BB-“, citing stronger growth prospects, an improving fiscal outlook and reduced contingent liabilities following better performance at state power utility Eskom.
National treasury has worked to arrest rising debt and restore fiscal credibility to put the country back on a growth path.
A recent mid-term budget review showed debt to GDP stabilising at 77.9% this financial year and the budget deficit narrowing to 4.7% of GDP in 2025/2026 from 4.8% in the May budget.
State-owned entities in freight logistics and power have also shown improvement as the country’s reform agenda gains momentum.
S&P said in a statement it expects South Africa’s GDP growth to pick up to 1.1% in 2025 after a subdued 0.5% in 2024 and to average 1.5% through the period from 2026 to 2028 as electricity and other sectors support growth.
Fiscal revenue has beaten budget targets early in fiscal 2025, and the agency sees successive years of primary surpluses and continued fiscal consolidation through to 2028. South Africa is now two notches below investment grade on the foreign currency rating.
Read: Markets signal a turning tide for South Africa as rand hits two-year high
The economy was first downgraded to junk status in 2017, following the firing of well-respected finance minister Pravin Gordhan by then President Jacob Zuma and the policy instability that ensued.
S&P affirmed the country’s outlook at “positive”. — Aatrayee Chatterjee and Kopano Gumbi, (c) 2025 Reuters
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