South Africa has received a significant boost from global credit rating agency Fitch Ratings, which has upgraded the country’s long-term foreign and local currency credit ratings to ‘BB’ from ‘BB-’, while maintaining a stable outlook.
The move marks the first time in nearly 21 years that Fitch has upgraded the country’s sovereign rating, signalling a notable shift in the country’s fiscal trajectory despite ongoing economic challenges.
Consistent record of prudent fiscal management
According to Fitch, the upgrade reflects South Africa’s consistent record of prudent fiscal management and tangible progress in fiscal consolidation.
This improvement has occurred in a difficult environment characterised by weak economic growth, as well as persistent domestic and external shocks. Importantly, recent GDP revisions have also contributed to keeping the government’s debt-to-GDP ratio lower than previously anticipated at the time of the downgrade to ‘BB-’ in 2020.
The development places South Africa among a select group of countries, making it only the second G20 nation to receive an upgrade from Fitch this year. This achievement stands in contrast to the broader global trend, where several investment-grade sovereigns have experienced negative rating actions amid heightened uncertainty linked to geopolitical tensions, including the ongoing conflict in the Middle East.
Consistent and widening primary surpluses
Fitch highlighted that South Africa has made a critical transition from running primary fiscal deficits to achieving consistent and widening primary surpluses. This means that government revenue now exceeds non-interest expenditure by an increasing margin. Improved revenue collection and firm expenditure controls have also contributed to indications that government debt is stabilising. Structural factors have further supported the rating decision.
Fitch pointed to the long average maturity of South Africa’s government debt—exceeding 10 years—which helps reduce refinancing risks. Additionally, the relatively low proportion of foreign-currency-denominated debt shields the country from exchange rate volatility. The agency also acknowledged ongoing reforms in key sectors such as energy and logistics, which are expected to bolster economic growth over the medium term.
The latest upgrade follows positive signals from other major rating agencies. In November 2025, S&P Global Ratings raised South Africa’s credit rating by one notch, while Moody’s Investors Service has assigned the country a positive outlook. As a result, all three major agencies now rate South Africa at ‘BB’ or ‘Ba2’, which remains two levels below investment grade. However, the positive outlooks from Moody’s and S&P suggest that further upgrades could be considered within the next 12 to 18 months.
Government committed to sound public finances
The government reaffirmed its commitment to maintaining sound public finances and advancing structural reforms aimed at driving higher and more inclusive economic growth. These efforts are seen as essential for strengthening investor confidence and improving the country’s long-term economic prospects.
“Improved sovereign credit ratings help to lower borrowing costs for government, businesses and households and have tangible benefits for ordinary people,” said National Treasury director-general Dr Duncan Pieterse. He noted that while South Africa still has some way to go before regaining investment-grade status, the latest upgrade represents a clear turning point after more than a decade of declining ratings trends.
Treasury hails ‘significant achievement’
“The turnaround is especially notable because it comes at a time when the global sovereign credit trend is overwhelmingly negative,” Pieterse added, underscoring the significance of the achievement in the current international environment.
Looking ahead, fiscal policy will remain anchored on stabilising and gradually reducing the debt-to-GDP ratio. This will be achieved by sustaining and expanding the primary budget surplus. Government plans to formalise this approach through the introduction of a fiscal anchor, the details of which are expected to be announced in the 2026 Medium-Term Budget Policy Statement.
Visit SW YouTube Channel for our video content
- Fitch Ratings upgraded South Africa’s long-term foreign and local currency credit ratings from ‘BB-’ to ‘BB’ with a stable outlook, marking the first upgrade in nearly 21 years.
- The upgrade reflects South Africa’s prudent fiscal management, fiscal consolidation, and lower-than-expected debt-to-GDP ratio despite economic challenges and weak growth.
- South Africa has transitioned from fiscal deficits to consistent primary surpluses, improved revenue collection, controlled expenditure, and is benefiting from long debt maturities and low foreign-currency debt.
- Energy and logistics sector reforms are expected to support medium-term economic growth, with other major rating agencies also signaling positive outlooks, potentially leading to further upgrades.
- The government commits to sound public finances and structural reforms, aiming to stabilize and gradually reduce debt through expanded primary surpluses, with a fiscal anchor plan to be introduced in the 2026 budget.
