S&P Global Ratings confirmed its long-term sovereign credit ratings for South Africa today, leaving the foreign-currency rating at BB and the local-currency rating at BB+. The ratings action also reaffirmed the sovereign short-term B ratings for both foreign and local currencies, and maintained the national-scale ratings at zaAAA/zaA-1+; the outlook remains positive.
The ratings agency based its view in part on what it describes as an improved fiscal trajectory. South Africa recorded its third consecutive year of primary fiscal surpluses in fiscal 2025, the year that ended on March 31, 2026. General government revenue exceeded revised budget projections, coming in at ZAR1.98 trillion versus a revised projection of ZAR1.8 trillion. S&P attributed the stronger revenue performance to robust corporate income tax receipts and higher commodity prices in the mining sector.
According to S&P, the country’s final deficit outturn for fiscal 2025 was 4.5% of GDP. The agency projects that deficits will decline to an average of 3.7% of GDP over fiscal years 2026-2029 and will reach 3.2% by fiscal 2029. Gross general government debt is viewed as having peaked in fiscal 2025 at 79% of GDP, with a forecast decline to 78% by fiscal 2029.
On the macroeconomic side, S&P revised down its near-term growth forecast for South Africa. Real GDP is expected to register growth of 1.2% in 2026, below a prior forecast of 1.4%, before rising to an average of 1.7% over 2027-2029. The agency said growth in 2026 will be restrained by higher inflation and interest rate increases that it links to an energy price shock stemming from the Middle East conflict.
Inflationary pressures have been evident in recent data: consumer price inflation rose to 4.0% in April 2026 from 3.1% in March. In response, the South African Reserve Bank raised its base rate by 25 basis points to 7% on May 28.
S&P also pointed to strengthened reform momentum under the Government of National Unity that took shape after the May 2024 elections. The government has advanced the second phase of "Operation Vulindlela," targeting reforms across electricity, transport, housing and other sectors. As part of that progress, load-shedding has fallen markedly, with no outages reported in the last 365 days.
In the power sector, Eskom posted its first profit in eight years in 2025, a development the agency noted while also flagging ongoing vulnerabilities. Arrears owed to Eskom by municipalities continue to present risks to the utility and to broader fiscal outcomes.
S&P highlighted contingent liabilities as another area of focus. The government had provided guarantees to state-owned enterprises totaling ZAR661 billion as of March 31, 2026, of which ZAR453 billion had been drawn. The agency also observed that foreign-currency-denominated debt remains below 15% of total government debt, which it says limits the sovereign’s sensitivity to exchange rate swings.
Overall, S&P’s assessment combines signs of fiscal consolidation and policy reform with ongoing structural risks tied to municipal arrears, guarantees to state-owned enterprises and near-term macroeconomic pressures from inflation and higher interest rates.