Moody’s says South Africa budget statement positive for credit

Moody’s Ratings stated on Monday that South Africa’s medium-term budget policy statement supports the country’s credit profile. The rating agency pointed to tighter monetary policy, ongoing fiscal consolidation despite higher oil prices, and weaker nominal GDP growth than projected in February.

The agency maintains South Africa’s rating at Ba2 with a positive outlook. No rating action was announced.

The government reduced its fiscal 2026 consolidated deficit target to 3.9% of GDP from 4% in the policy statement. The adjustment was supported by a 17.1 billion rand upward revision to gross tax revenue.

Moody’s projects government debt will reach 84.9% of GDP by fiscal 2028, down from approximately 86.8% in fiscal 2025. The agency indicated that debt has likely peaked.

Debt affordability remains weak, according to Moody’s, with interest payments consuming 18.8% of general government revenue in fiscal 2025.

The rating agency described draft legislation to establish fiscal rules for budgeting and debt as credit positive. Moody’s noted that without a binding numerical target, the legislation’s credibility would depend on consistent application.