South Africa’s debt is projected to peak this fiscal year after rising for nearly two decades, the country’s finance minister announced, creating room for more infrastructure investment and tax relief in Africa’s largest economy.
Unveiling the annual budget, Enoch Godongwana also said the government was working on a set of rules to try to ensure that public finances are sustainable over the longer term, which he referred to as a legal “fiscal anchor.”
South Africa’s credit rating was finally upgraded late last year, marking its first boost since 2005. Its recent removal from a global financial watchdog’s “gray list” of countries monitored for money laundering has also contributed to improved investor sentiment. In a note to clients, Goldman Sachs said the budget announcements “came as a significant positive surprise to the market,” adding that it expects “further positive sovereign credit ratings action.”