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Ratings agency Fitch has affirmed South Africa’s long-term foreign and local currency debt ratings at BB- and maintains a stable outlook for the country, National Treasury said in a statement on Friday.
"According to Fitch, South Africa’s credit rating is constrained by several factors, including low real GDP growth, high poverty and inequality levels, a high government debt-to-GDP ratio, and a rigid fiscal structure that hampers deficit reduction," the Treasury noted.
The ratings are however supported by a "favourable debt structure, with long maturities and mostly local-currency-denominated, strong institutions and a credible monetary policy framework".
The initiative has already led to significant improvements at Eskom regarding electricity generation, with no load shedding since March 2024.
"The ratings agency views the Government of National Unity [GNU], where the ANC remains the largest party, as a factor that reduces short-term policy uncertainty and facilitates the continuation of the implementation of the reform programme," the Treasury says.
This will contribute to a "modest increase in real GDP growth".
According to National Treasury, the government’s strategy for fiscal consolidation over the medium term involves exercising expenditure restraint and implementing moderate revenue increases, while continuing to support the social wage and ensuring additional funding for critical services.
Fiscal risks will be mitigated by reducing borrowing over the medium term through leveraging a portion of valuation gains in the Gold and Foreign Exchange Contingency Reserve Account.
Extensive reforms in energy, freight, water, and telecommunications are also in progress.
