Outlook Change: Moody’s upgraded South Africa’s sovereign outlook from stable to positive on 23‑05‑2026, while affirming Ba2 ratings for both domestic and foreign‑currency long‑term issuer and senior unsecured debt.
Fiscal Projections: Primary budget surplus estimated at ~1 % of GDP for FY 2025‑26 (ending March 2026), expected to increase to ~2 % of GDP by FY 2028. This fiscal improvement, together with lower debt‑service costs, is projected to reduce the general‑government debt‑to‑GDP ratio from an estimated 87 % in 2025 to about 85 % in 2028.
Growth Outlook: Real GDP growth forecast lifted to around 2 % by 2028, up from an average of 0.8 % for 2023‑25. However, Moody’s trimmed its 2026 and 2027 real‑GDP growth estimates by 20‑50 basis points because of the Middle‑East conflict’s impact on South Africa’s inflation and real incomes.
Investment & Confidence: Ongoing structural reforms, stronger investment, resilient consumption, and the recent removal of South Africa from the Financial Action Task Force (FATF) grey list have bolstered investor confidence.
Debt Service & Interest Expenditure: Headline interest expenditure is projected at roughly 19 % of government revenue in 2025, which is weaker than many peers with similar ratings.
Rating Ceilings: Country ceilings remain unchanged – Baa1 for local‑currency and Baa2 for foreign‑currency sovereign ratings.
Rating Committee: A rating committee convened on 19 May 2026 to discuss the sovereign rating.
