Moody’s Ratings says South Africa is heading in the right direction for its first credit-rating upgrade since 2009, provided fiscal performance continues to improve. The agency revised the country’s credit outlook to positive from stable in May, noting it has reached an inflection point after stabilizing debt and delivering pro-growth reforms. Moody’s currently rates South Africa Ba2 — two notches below investment grade.
Evan Wohlmann, a vice president at Moody’s, stated the rating could be upgraded if fiscal performance improves, hinging on confidence in the evolving credit profile. Finance Minister Enoch Godongwana is expected to show continued growth in the primary budget surplus during his mid-term budget review on Oct. 21. The baseline forecast projects debt declining from 87% of GDP to 84% by the end of the decade.
Structural reforms are beginning to deliver results, with Nedbank Group Ltd. predicting growth will rise to 1.9% in the next two years and possibly reach 2.5% by 2030. Despite municipal elections on Nov. 4 that may weaken the African National Congress, Moody’s sees low risk of political reversal, citing the 2024 shift to a coalition government. The agency notes it upgrades about 60% of sovereign credits with a positive outlook.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing