Credit rating agency Moody’s revised its outlook on South Africa to positive from stable citing strengthening fiscal performance and reforms.
It, however, maintained the country’s long-term foreign and local currency issuer ratings at Ba2 with government welcoming the decision move.
South Africa has long struggled with rising public debt driven by weak growth state-owned company support and COVID-19 pandemic impacts.
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Agency said the positive outlook reflects a rising primary surplus improving debt service costs and expected debt stabilization near term.
South Africa’s heavy debt burden is easing as government reins in spending boosts taxes and pursues growth reforms agenda continues.
Despite improved outlook Moody’s said South Africa remains constrained by weak fundamentals low growth potential and high inequality pressures persist.
Moody’s added continued fiscal discipline could eventually place debt on a clearer downward path over medium-term horizon outlook trajectory expected.
S&P Global upgraded South Africa’s sovereign rating to BB from BB- in November first upgrade in nearly 20 years marking.