Moody’s described South Africa’s medium-term budget policy statement as positive for the country’s credit profile in a report released on October 26. Reuters reported that the agency cited tighter monetary policy and continued fiscal consolidation despite higher oil prices and weaker nominal economic growth than assumed in February.
The agency maintained a Ba2 rating with a positive outlook and did not announce a rating action. The budget statement had lowered the fiscal 2026 consolidated deficit target to 3.9% of GDP from 4.0%, supported by a 17.1 billion rand upward revision to gross tax revenue.
Moody’s forecast government debt of 84.9% of GDP by fiscal 2028, compared with about 86.8% in fiscal 2025, and said debt had probably peaked. It nevertheless noted weak affordability, with interest accounting for 18.8% of general government revenue in fiscal 2025. Proposed fiscal-rule legislation was viewed favourably, but its credibility would depend on consistent application without a binding numerical target. A positive assessment should therefore not be read as a sovereign upgrade.