Moody’s Ratings changed its outlook on South Africa to positive from stable.
In its reaction, the National Treasury noted that South Africa was the only G20 country to have its outlook changed to positive this year.
Moody’s reasons for change
Moody’s said the positive outlook reflected South Africa’s gradually strengthening fiscal performance and sustained commitment to structural reforms.
“We expect a rising primary surplus and gradually improving debt-service costs to stabilise the general government debt burden in the near term. The better fiscal outlook for South Africa is still at an early stage but continued improvements could support a shift to a clear downward trajectory in debt and debt-service costs,” it said.
A primary surplus is when revenue exceeds non-interest expenditure. If this maintained over time, then the government debt will be reduced, so allowing even more interest rate reductions, as the government cuts its call on the available savings pool.
Stronger economic growth
Additionally, Moody’s expected 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,” Moody’s added.
National Treasury response
The National Treasury noted that the upgrade to a positive outlook is the first by Moody’s since 2007. That change to a positive outlook was the followed by an upgrade of the rating itself in 2009.
The National Treasury said it remains firmly committed to reducing the public debt while maintaining social spending and accelerating structural reforms to support inclusive growth and job creation.
“The latest decision by Moody’s is further confirmation of South Africa’s improving fiscal credibility due to a turnaround in the sustainability of public finances,” Director General of the National Treasury Duncan Pieterse said.
He added that the National Treasury continues to focus on its two fiscal objectives of ensuring that revenue continues to be ever higher than non-interest spending and maintaining a debt to GDP ratio that comes down from the current year onwards.
“We plan to embed the fiscal turnaround with the introduction of a fiscal anchor for South Africa,” he concluded.
Impact on South African economy
Credit rating changes have real world consequences for South Africans as an upgrade means that the South African government and South African financial institutions are more credit worthy.
That means that they can issue bonds at lower yields, which results in these financial institutions being able to offer lower interest rates to their customers.
Rand impact
As South African government and corporate bonds are now more credit worthy, this encourages foreign investors to buy more of these assets.
As the demand for the South African rand increases, so the value of the rand strengthens. This then lowers the cost of imports, which leads to lower inflation.
S&P Global November 2025 upgrade
International credit ratings agency S&P Global upgraded South Africa’s credit rating to BB on 14 November 2025.
This was the first upgrade for South Africa by a credit rating agency in over 16 years.
