After nearly two decades of credit stagnation, South Africa finally caught a break. S&P Global raised the country's long-term foreign currency rating to ‘BB' from ‘BB-‘ on November 14, 2025. First upgrade since 2005. The outlook? Positive. Which means more could be coming.
S&P Global upgraded South Africa to BB from BB- with positive outlook—first credit rating improvement in twenty years.
The local currency rating jumped to ‘BB+'. Not investment grade—still two notches below that—but progress nonetheless. Markets responded well. Investor sentiment improved. Finally, some validation after years of policy chaos and the 2017 downgrade that kicked them to “junk” status.
What drove this? Fiscal reforms, mostly. Debt management strategies that actually looked credible for once. State-owned enterprises, especially Eskom, stopped being complete disasters. Early fiscal-year revenue exceeded expectations. The government debt-to-GDP ratio is expected to stabilize at 77.9% for 2025. Still high, but at least it's not climbing.
The budget deficit narrowed to 4.7% from 4.8%. Modest improvement. Primary surpluses are forecast to rise from R68.5 billion in 2025 to over R220 billion by 2028/29. GDP growth is projected at 1.1% in 2025 after a dismal 0.5% in 2024. Average growth expected at 1.5% for 2026–2028. Not exactly explosive, but better than stagnation.
Electricity sector reforms made a difference. Eskom's turnaround was pivotal. Reducing contingent liabilities helped too. S&P acknowledged the macro policy framework looked credible, and institutions maintained strength.
But let's be clear. This is still below investment grade. That 78% debt-to-GDP ratio remains elevated. Growth projections are modest compared to emerging market peers. South Africa remains vulnerable to global shocks and domestic bottlenecks. The upgrade signals reduced sovereign risk and should help attract foreign direct investment, especially ahead of the 2025 G20 Leaders' Summit. The SARB's monetary policy decisions will remain critical in maintaining currency stability as foreign investor interest increases following this upgrade. The central bank may also need to consider foreign exchange interventions to manage rand volatility as capital flows respond to the improved credit rating. Meanwhile, the FSCA continues to strengthen its oversight of forex brokers to ensure market integrity as trading activity increases with improved investor confidence.
The real question: can they maintain momentum? Sustained reforms and fiscal discipline are non-negotiable. S&P's positive outlook suggests further upgrades are possible, but only if they deliver. One upgrade doesn't erase decades of mismanagement. It's a start, not a victory lap.
