Rating agency Fitch has suggested that it may upgrade South Africa’s credit outlook.
Fitch rated South Africa BB-Affirmed in September 2024 and noted that SA has a long-term issuer default rating.
Fiscal responsibility
The agency said that this rating upgrade will only happen if government continues on its path of fiscal stability.
Government needs to continue to stabilise debt as it said in the Medium Term Budget Policy Statement (MTBPS).
“It could be positive for the sovereign’s rating if debt does follow the path projected by the government,” Fitch said in a statement.
The agency said that the budget forecasts are optimistic.
Fitch said that it expects the debt-to-gross domestic product (GDP) ratio to grow in the next few years and noted that it could reach 76.9% in the 12 months through March 2027.
South Africa’s current debt will reach 75.5% of GDP by March 2026.
“Our debt forecast is higher than that of the government,” Fitch said.
“If we become more confident that South Africa’s medium-term growth outlook will improve sufficiently to reduce challenges associated with fiscal consolidation, this could also be positive for the rating,” it explained.
SA debt will hit R6.05 trillion in 2025
Last week, Finance Minister Enoch Godongwana warned that South Africa’s debt has risen too fast and too high - currently R5.2 trillion, and the country has to manage its debt more effectively.
Godongwana made the remarks while delivering the MTBPS In Parliament.
“We are anticipating that government debt will reach more than R6.05 trillion in 2025/26,” he said.
“We know that our debt is unsustainable, because debt-service costs have become the largest component of our spending and it is rising faster than economic growth.”
Godongwana said debt-service costs would reach R388.9 billion in the current financial year.
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