By Suren Naidoo.
Two of South Africa’s credit ratings have been officially upgraded by international agency S&P Global Ratings, as expected, following the country’s improved fiscal position reflected in this week’s 2025 Medium Term Budget Policy Statement (MTBPS).
S&P decided to upgrade both SA’s foreign currency long-term sovereign credit rating to ‘BB’ from ‘BB-‘ and local currency long-term sovereign credit rating to ‘BB+’ from ‘BB’. Its outlook remains positive.
A ‘BB+’ rating is one notch below investment grade, while a ‘BB’ rating is two notches below investment grade, according to S&P’s website. “Credit ratings are forward-looking opinions about an issuer’s relative creditworthiness,” it notes.
The SA Government welcomed the move in a statement from National Treasury issued just before midnight on Friday.
“The sovereign credit rating upgrade marks the first upgrade for South Africa by any of the major credit rating agencies in over 16 years, “it said.
“South Africa is one of just three countries globally to secure an S&P upgrade in 2025, while continuing to maintain a positive outlook after the rating revision, ” the National Treasury added.
‘Clearly good news’
Commenting on SA’s crucial international credit rating upgrade (or foreign currency long-term sovereign credit rating) from ‘BB-‘ to BB, STANLIB chief economist Kevin Lings said this is the first time in 20 years that S&P has upgraded SA’s credit rating, which “is clearly good news”.
“After the upgrade, South Africa remains two notches below investment grade. Earlier today Fitch decided to keep SA’s credit rating unchanged at BB- and they also kept SA on a stable credit rating outlook,” he noted.
“Moody’s has South Africa on a Ba2 credit rating with a stable outlook. This is equivalent to an S&P credit rating of BB, which means S&P and Moody’s now have SA on the same credit rating,” Lings pointed out.
Moody’s is scheduled to review SA’s rating on 5 December 2025.
“According to S&P, the rating upgrade reflects South Africa’s improving growth and fiscal trajectory, alongside a reduction in contingent liabilities tied to performance improvements at the state-owned electricity utility, Eskom.
“The government is on track to post its third annual primary surplus [revenue minus expenditure, excluding interest payments on debt] in 2025/26, while contingent liabilities are likely to ease as Eskom is being reformed,” its statement noted.
“Further, general government revenues are forecast to outperform budgeted numbers for 2025/26, despite the government having revised down its GDP growth forecasts. This is due to strong value added tax [Vat] and corporate income tax receipts, which have exceeded estimates, alongside higher-than-expected tax buoyancy rates,” it said.
Finance Minister Enoch Godongwana said during his mid-term budget speech on Wednesday that SA’s fiscal position is improving and committed to accelerating the government’s ambitious R1 trillion infrastructure investment drive.
National Treasury reiterated the position following the ratings upgrades by S&P on Friday night.
“Over the medium term, this will strengthen growth prospects, reduce borrowing costs, improve confidence and foster faster job creation. The 2025 MTBPS underscores government’s commitment to fiscal sustainability, even in a low-growth environment,” it said.
“Fiscal policy continues to support macroeconomic stability by stabilising debt in the current year, growing the primary balance over the next several years and narrowing the budget deficit over the Medium-Term Expenditure Framework [MTEF] period.
“Raising South Africa’s growth trajectory depends on continuing to strengthen macroeconomic stability, accelerating structural reforms, building a capable state and improving public-sector infrastructure investment,” it emphasised.