Government Welcomes Moody’s Ba2 Rating Affirmation with Stable Outlook

The National Treasury emphasized its commitment to sustainable and inclusive economic development.

The South African government has expressed its approval of Moody’s recent decision to affirm the country’s long-term foreign and local currency debt ratings at ‘Ba2’ with a stable outlook. This rating reflects both South Africa’s credit strengths and persistent economic challenges.

Moody’s highlighted several factors supporting South Africa’s creditworthiness:

Strong core institutions such as the judiciary and central bank.

A robust and deep financial sector.

A solid external position with manageable external vulnerabilities.

However, the agency also noted significant challenges, including:

Widespread inequality and social risks that hinder reform efforts.

Persistent structural barriers to economic growth.

High levels of debt and associated costs, limiting fiscal flexibility.

Government’s Response

The government welcomed Moody’s recognition of its efforts to drive structural reforms and unlock growth potential. The National Treasury emphasized its commitment to sustainable and inclusive economic development.

“Economic reforms are beginning to yield results; electricity availability has improved, logistics are stabilizing, and the cost of doing business is declining in some areas,” the Treasury stated.

Reforms and Growth Strategies

In line with the 2024 Medium-Term Budget Policy Statement (MTBPS), South Africa’s growth strategy is anchored on four key pillars:

Maintaining Macroeconomic Stability: Prudent fiscal management to ensure debt sustainability and economic resilience.

Implementing Structural Reforms: Addressing bottlenecks in energy, logistics, and regulatory processes to stimulate private sector participation.

Building State Capability: Strengthening institutional efficiency and service delivery.

Investing in Growth-Enhancing Infrastructure: Transforming the preparation and execution of infrastructure projects by mobilizing private sector participation to complement public-sector efforts.

Infrastructure and Investment Initiatives

The government has launched initiatives to improve infrastructure delivery, particularly through partnerships with the private sector. These partnerships aim to enhance public-sector capacity, reduce financing constraints, and drive job creation.

“By transforming the way we prepare and deliver infrastructure projects, we are creating an environment that encourages private sector investment. These efforts will ultimately support broader economic recovery,” Treasury added.

Recent Economic Improvements

The government highlighted early signs of progress from reforms:

Electricity: Increased availability has reduced disruptions.

Logistics: Stabilization efforts in ports and rail are improving efficiency.

Ease of Doing Business: Regulatory changes are lowering operational costs for businesses in several sectors.

Challenges and Outlook

Despite these improvements, significant challenges remain. Addressing high unemployment, reducing inequality, and sustaining debt management efforts are critical to maintaining fiscal stability.

Moody’s stable outlook reflects cautious optimism that South Africa’s reform trajectory will support gradual improvements in economic performance, but persistent risks warrant continued focus on policy execution and inclusive growth.

By prioritizing collaboration between public and private sectors, maintaining institutional strength, and driving strategic reforms, the government aims to build a more resilient and equitable economic future.