South Africa received a dual boost from ratings agencies on Friday (November 14) as Fitch affirmed its sovereign rating and S&P Global Ratings delivered the country’s first upgrade in nearly two decades. The actions followed the release of the Medium-Term Budget Policy Statement (MTBPS) earlier in the week.

Fitch affirmed South Africa’s sovereign rating at BB- with a stable outlook. The agency said the government had reaffirmed its commitment to gradual consolidation and noted that it applies conservative assumptions about interest-cost savings from disinflation, emphasising that South Africa’s long average debt maturity means a decline in yields will take time to filter through to funding costs.

S&P Global Ratings upgraded South Africa’s long-term foreign-currency rating to BB and also raised the local-currency rating to BB+. Both remain below investment grade. S&P maintained a positive outlook, indicating potential for further improvement if consolidation and revenue gains continue.

Presenting the MTBPS on November 12, Finance Minister Enoch Godongwana projected that the country’s debt-to-GDP ratio will peak at 77.9% in the current fiscal year, compared with an earlier estimate of 77.4%.

The MTBPS formally adopted a 3% inflation target, with a 1% tolerance band, aligning fiscal policy with the South African Reserve Bank’s preferred anchor for price expectations and replacing the previous 3–6% range. Treasury said the lower target would bring near-term fiscal costs owing to slower nominal GDP and revenue growth.

The statement confirmed ongoing work on fiscal rules and noted that, under the revised Gold and Foreign Exchange Contingency Reserve Account (GFECRA) settlement framework, the annual evaluation will deliver a planned ZAR31bn ($1.8bn) transfer to the Treasury in 2026/27 to pay down debt. The government highlighted recent reforms in electricity and logistics and signalled plans to accelerate further changes.

The budget also showed stronger revenue collection, with Treasury projecting tax receipts to be around ZAR20bn above the May estimate, mainly due to elevated commodity prices that boosted corporate income taxes.

Fitch said the authorities’ revenue projections were conservative, pointing to upside risks from continued corporate tax outperformance and operational gains at the South African Revenue Service.

Both agencies said that sustained consolidation efforts and stronger revenue performance are central to stabilising South Africa’s debt trajectory over the medium term.

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