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Major upgrade in sight for South Africa
South Africa could secure its first credit-rating upgrade from Moody’s Ratings since 2009 if the government continues to strengthen public finances and deliver on economic reforms.
The ratings agency currently assigns South Africa a Ba2 rating, two notches below investment grade. In May, it changed the country’s outlook from stable to positive, signalling that an upgrade could follow if fiscal improvements are sustained.
“We could upgrade South Africa’s rating if fiscal performance continues to improve,” Moody’s vice-president Evan Wohlmann said during a virtual media briefing on Tuesday.
According to Business Tech, Wohlmann said the decision would depend on whether the agency remained confident that South Africa’s credit profile was improving.
The comments come ahead of Finance Minister Enoch Godongwana’s medium-term budget policy statement on 21 October, which is expected to provide an update on government revenue, spending and debt.
A key measure will be the primary budget surplus, which reflects the difference between government revenue and expenditure excluding interest payments on debt.
Moody’s expects South Africa’s government debt, which peaked at 87% of gross domestic product in the previous financial year, to decline gradually to 84% by the end of the decade.
The forecast depends partly on stronger economic growth and continued improvements in the country’s fiscal position.
The forecast depends partly on stronger economic growth and continued improvements in the country’s fiscal position.
South Africa’s economy has grown by less than 1% a year on average over the past decade. However, structural reforms aimed at addressing longstanding economic constraints are beginning to improve the outlook.
Nedbank expects economic growth to reach 1.9% over the next two years, with growth of 2.5% possible by 2030.
An improved credit rating could strengthen investor confidence and help lower borrowing costs, although a return to investment-grade status would require further rating improvements.
According to Moneyweb’s the investment bank expected stronger tax collections and improving public finances to support further rating upgrades from Moody’s and S&P Global Ratings over the following year.
South Africa’s political environment will also be a factor as the country prepares for local government elections on 4 November.
South Africa is heading in the right direction for its first credit-rating upgrade by Moody’s Ratings since 2009, provided the country’s fiscal performance continues to improve.
https://t.co/pbzTlM5AAbDaily Investor (@DailyInvestorSA) October 14, 2026
The African National Congress faces pressure after losing its parliamentary majority in the 2024 national elections, leading to the formation of a coalition government.
Despite the uncertainty, Moody’s sees limited risk that the electoral cycle will reverse the country’s economic reform programme.
“We see the risk of a reversal in policy from the forthcoming electoral cycle as limited,” Wohlmann said.
The agency’s assessment reflects the view that the move towards coalition government has not fundamentally derailed the reform agenda.
In May, Moody’s cited improving fiscal performance and progress on structural reforms when it revised South Africa’s outlook to positive. According to BusinessDay’s the agency nevertheless warned that weak growth potential, high inequality and the country’s debt burden remained constraints on its rating.
A positive outlook does not guarantee an immediate upgrade. Moody’s upgrades about 60% of sovereign ratings it places on a positive outlook, according to the figures cited in the original report.
South Africa was downgraded to Baa2 in 2012 before Moody’s cut its rating below investment grade in 2020.
Moody’s senior vice-president for ratings, Lucia Villa, said historical experience showed that rating downgrades generally involved roughly twice as many annual rating notches as upgrade cycles.
The government’s next major test will be demonstrating that stronger revenue collection, fiscal discipline and economic reforms can be sustained.
Godongwana’s medium-term budget policy statement on 21 October will provide a fresh indication of progress towards stabilising public finances.
For now, Moody’s has signalled that an upgrade is possible, but South Africa must continue improving its fiscal position before that decision can be made.
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Source: African Insider / Glaan Sibuyi
Picture: @GovernmentZA / X
