Positive move: Moody’s ‘upgrades’ South Africa’s outlook

London-based Moody’s Ratings has upgraded its outlook on South Africa’s domestic and foreign-currency long-term issuer and senior unsecured ratings to positive from stable, while affirming the ratings at Ba2.

It announced the move in a late night statement on Friday, saying the “positive outlook reflects South Africa’s gradually strengthening fiscal performance and sustained commitment to structural reforms, with prospects of increasingly tangible results”.

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While the ratings at Ba2 level is still below investment-grade and referred to as ‘junk status’ or as high-yield, the improvement in SA’s outlook to positive is seen as a step in the right direction as the country hopes to regain its investment grade ratings.

Moody last had SA at investment grade status in early March 2020. It was the last major ratings agency to lower SA to junk later in March 2020, which coincided with Covid-19 lockdowns in the country. S&P and Fitch had lowered SA to sub-investment grade in 2017.

“Moody’s Ratings has today changed the outlook on the Government of South Africa to positive from stable, and has affirmed the Government of South Africa’s domestic and foreign-currency long-term issuer and senior unsecured ratings at Ba2,” it said in a statement on Friday evening.

“We expect a rising primary surplus and gradually improving debt-service costs to stabilise the general government debt burden in the near term,” Moody’s said.

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Middle East conflict

This is despite the impact of the Middle East conflict on global oil prices, which has seen fuel prices in SA spike and the National Treasury stepping in with a reduction in fuel levies that’s expected to ‘cost’ around R17 billion.

“The better fiscal outlook for SA is still at an early stage but continued improvements could support a shift to a clear downward trajectory in debt and debt-service costs,” Moody’s noted.

“We expect stronger investment, supported by ongoing reforms, to gradually raise real GDP growth to around 2% by 2028 and underpin fiscal improvements.

“While the Middle East conflict poses a risk to near-term growth, we expect the policy response to remain measured and macroeconomic stability to be preserved. Moreover, the risk of a reversal in policy from the forthcoming electoral cycle appears limited, although the cycle could test reform momentum,” it added.

Reaction 

National Treasury and the SA government applauded the move.

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“Government welcomes Moody’s decision to revise South Africa’s sovereign credit rating outlook to positive from stable and affirm the domestic and foreign-currency long-term ratings at Ba2,” Treasury said.

“This makes South Africa the only G20 nation currently on a positive outlook from Moody’s,” Treasury highlighted.

“It comes at a time of negative ratings momentum globally, with over 23 sovereigns’ credit ratings negatively impacted since the start of the current Middle East conflict.

“The upgrade to a positive outlook is the first by Moody’s since 2007 [which was followed by an upgrade of the rating itself in 2009]. It comes after S&P Global Ratings upgraded South Africa’s rating by one notch in November 2025 and retained its positive outlook,” it added.

“Government remains firmly committed to reducing the public debt, while maintaining social spending and accelerating structural reforms to support inclusive growth and job creation,” Treasury reiterated.

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