S&P Global Ratings has upgraded South Africa’s long-term sovereign ratings, assigning the country BB for foreign currency and BB+ for local currency, with a positive outlook.
The upgrade, from BB- in foreign currency and BB in local currency, follows an outperformance in H1 2025 fiscal revenue targets and the expectation that the South African government will announce a third successive year of primary surplus. Fiscal consolidation is expected to continue until 2028.
Overall, real GDP growth for the country is expected to rise to 1.1% in 2025 and reach an average of 1.5% between 2026 and 2028.
The agency sees potential for further improvements in fiscal metrics and government debt stabilisation, it noted, with the chance of stronger growth if authorities accelerate economic reforms. These include the ‘Operation Vulindlela’ initiative, which priortises reforms in a number of areas such as electricity and water.
Also impacting the change is the reduction in financial support needed for state-owned enterprises such as electricity utility Eskom. The business recently reported profits for the first time in eight years.
JSE Group CEO Leila Fourie commented, “Credible policy, disciplined execution, and ongoing collaboration between government, business, and institutions are rebuilding the foundations of stability and long-term growth. When reforms take root, credibility strengthens, investment follows, and momentum begins to compound.”
South Africa was also taken off the Financial Action Task Force’s (FATF) grey list last month, a decision which Fourie says will increase confidence in the integrity of the country’s financial systems.
Public debt levels will remain high, S&P Global Ratings predicts, with gross government debt reaching 79% of GDP in 2025 and falling to 77% by 2028. Inflation is expected to drop from 4.4% in 2024 to 3.4% this year, impacting the South African Reserve Bank’s decision to cut rates to 7.0%. Its target for 2025-2028 is 3%.
“[This target] deepens South Africa’s macroeconomic anchor. It aligns the country with global practice and should, over time, lower inflation expectations, create room for lower interest rates, and reduce borrowing costs across the economy,” the JSE concluded.
Fitch Ratings affirmed South Africa’s BB- rating in September. It was upgraded from a negative to stable outlook in December 2021.
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