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Moody’s Ratings reports that South Africa’s fiscal outlook is improving, with government debt expected to stabilise this year before beginning a gradual decline.
This positive shift is driven by stronger tax revenue, disciplined spending, and lower borrowing costs.
While debt levels remain high—exceeding 80 per cent of GDP—the agency anticipates the national deficit will narrow to 3.8 per cent by 2027.
This fiscal recovery is supported by a projected primary surplus that should surpass the levels necessary to keep debt under control.
The report highlights that South Africa’s move toward a lower inflation target of 3 per cent will be instrumental in reducing financial risk and funding expenses.
Moody’s forecasts that real GDP growth will climb toward 2 per cent by 2028, fuelled by increased investment and steady consumer spending.
Continued structural reforms in the electricity, water, and logistics sectors are seen as vital components that could further boost the country’s growth potential and attract private capital.
On the political front, Moody’s maintains a stable outlook for the nation, operating on the baseline that the current Government of National Unity will remain intact through its term.
Although the upcoming 2027–2029 electoral cycle will serve as a test for the durability of these reforms, the agency believes the risk of a major policy reversal is low.
Both the African National Congress and the Democratic Alliance appear committed to maintaining stability ahead of the 2029 general election.
