Moody’s welcomes South Africa’s deficit cut to 3.9% of GDP
By the AFREEQUE newsroom, based on Businessday
Moody’s Ratings considers South Africa’s budget update positive for its creditworthiness, bringing the consolidated deficit target for 2026 to 3.9% of GDP, from 4% previously. The agency estimates public debt could fall to 84.9% of GDP in 2028, but highlights the continuing burden of interest payments, according to Reuters.
Moody’s Ratings considers the reduction of South Africa’s consolidated budget deficit target to 3.9% of GDP for the 2026 financial year, from 4% previously, positive for the country’s credit profile, according to a report published by the ratings agency on Monday and cited by Reuters.
Moody’s, which rates South Africa Ba2 with a positive outlook, has announced no change to the rating. The agency attributes the improved target to an upward revision of 17.1 billion rand in gross tax revenue, as well as continued fiscal consolidation despite rising oil prices.
The agency forecasts that public debt will reach 84.9% of GDP in the 2028 financial year, compared with about 86.8% in 2025, suggesting that its peak may have been passed. Debt-servicing costs nevertheless remain high: interest payments absorbed 18.8% of general government revenue in 2025.
Moody’s also considers the bill intended to establish fiscal and debt rules to be credit positive. Its credibility will nevertheless depend on consistent enforcement, as the legislation sets no binding numerical target, according to the agency.
