<\/p>\n
South African government debt is still on track to have peaked despite the Iran war, Moody\u2019s Ratings said in a new report that endorsed the nation\u2019s focus on reform and prudent public finances.<\/p>\n
\u201cImproving fiscal performance and steady reform momentum support our view that government debt will stabilise this year before gradually declining,\u201d the ratings agency said in a note on Wednesday. \u201cThis credit-positive shift is supported by stronger revenue, greater spending restraint and improving funding costs.\u201d<\/p>\n
Investors warmed to South African assets following better-than-expected news from its February budget and after it won an upgrade from S&P Global Ratings, which lifted its credit assessment for the first time in two decades to BB with a positive outlook.<\/p>\n
Moody\u2019s rates South Africa at Ba2 with a stable outlook, which it is expected to review later this month.<\/p>\n
The agency saw South Africa\u2019s debt peaking at 86.8% of gross domestic product in the fiscal year ending March 2026, above National Treasury\u2019s 78.9% forecast, before easing to 84.9% by 2028.<\/p>\n
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It also sees the consolidated budget deficit narrowing to 4.3% in the current fiscal year from 4.5%, helped by rising primary surpluses, which exclude debt-service costs.<\/p>\n
\u201cThe 2026 budget confirmed South Africa\u2019s improving fiscal position and the authorities\u2019 commitment to consolidation,\u201d Moody\u2019s said.<\/p>\n
Still, the agency cautioned that faster debt reduction will depend on stronger economic growth, which faces a near-term threat from the fallout over the conflict in the Middle East.<\/p>\n
Even so, it expects fiscal and monetary authorities to respond to the economic impact of the war in a \u201cmeasured and proportionate\u201d way, estimating the drag on growth at about 20 to 50 basis points in 2026 and 2027 if inflation averages close to 4% this year.<\/p>\n
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The country\u2019s forthcoming electoral cycle also poses risks.<\/p>\n
South Africa will hold municipal elections on November 4, a key test of support for the African National Congress after it lost its parliamentary majority in 2024 and began governing in a coalition as the largest party.<\/p>\n
How the ANC fares in the ballot could influence internal party dynamics and support for the government\u2019s current policies. Moody\u2019s viewed the risk of a sharp policy reversal as low and said that it expects the so-called Government of National Unity to hold together for the rest of its term. The next national elections will be held in 2029.<\/p>\n
Still, \u201cthe durability of reform momentum will be tested if there is a new administration which is less committed to progressing reforms and tackling vested interests.\u201d<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Moodys #South #Africa #track #stabilise #debt #year<\/p>\n","protected":false},"excerpt":{"rendered":"
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