South Africa has earned a significant nod from international markets after S&P Global Ratings lifted the country’s long-term sovereign credit ratings, its first upgrade for the country by a major rating agency in more than a decade.
The improved ratings follow the fiscal outlook presented in this week’s 2025 Medium Term Budget Policy Statement (MTBPS), as the decision highlights renewed confidence in government finances and stabilisation efforts.
As reported by Moneyweb, S&P raised South Africa’s foreign currency long-term sovereign credit rating to ‘BB’ from ‘BB-’, while the local currency rating increased to ‘BB+’ from ‘BB’.
National Treasury welcomed the move, saying in a late-night statement: ‘The sovereign credit rating upgrade marks the first upgrade for South Africa by any of the major credit rating agencies in over 16 years.’
Commenting on the foreign currency rating change, STANLIB chief economist Kevin Lings said this marks the first time in 20 years that S&P has upgraded South Africa’s rating.
He added that despite the positive step, South Africa remains two notches below investment grade.
Lings also outlined the positions of other rating agencies: ‘Moody’s has South Africa on a Ba2 credit rating with a stable outlook. This is equivalent to an S&P credit rating of BB.’
S&P attributed the upgrade to South Africa’s improving growth and fiscal trajectory, along with reduced financial risks tied to Eskom.
The agency noted progress in stabilising the state-owned utility, which has long been a source of contingent liabilities.
‘The government is on track to post its third annual primary surplus in 2025/26,’ S&P said, adding that revenues are likely to outperform earlier expectations due to stronger VAT and corporate income tax receipts.
Finance Minister Enoch Godongwana echoed this trend earlier in the week, saying the country’s fiscal position is improving and reaffirming the government’s R1 trillion infrastructure investment plans.
Treasure reiterated this message after the S&P announcement: ‘Over the medium term, this will strengthen growth prospects, reduce borrowing costs, improve confidence and foster faster job creation.’
Officials added that the MTBPS confirms the state’s commitment to fiscal sustainability by stabilising debt this year, building a stronger primary balance over the medium term, and narrowing the budget deficit across the MTEF period.
‘Raising South Africa’s growth trajectory depends on continuing to strengthen macroeconomic stability, accelerating structural reforms, building a capable state and improving public-sector infrastructure investment,’ Treasury emphasised.
Be the first to know – Join our WhatsApp Channel for content worth tapping into! Click here to join!
Also read:
Picture: Unsplash/Jacques Nel
