South Africa may be on the brink of securing its first credit rating upgrade in almost two decades — a development that would cut the cost of borrowing and cement investor confidence around policy changes in Africa’s biggest economy.
South Africa has been rated as sub-investment grade by all the main rating agencies since 2020, but analysts say S&P Global may see grounds for an upgrade to BB, from BB-, when it delivers its latest sovereign rating decision on Friday. Investor optimism lifted the rand this week to its strongest levels in more than two years following a half-year budget that presented an improved fiscal outlook and saw the government cut its inflation target for the first time this century to 3%, giving political backing to the central bank, which lobbied for the change. “The adoption of a lower inflation target now signals important reform progress,” Razia Khan, Standard Chartered’s head of research for Africa, told Semafor.
South Africa’s recent removal from a global financial watchdog’s “gray list” of countries monitored for money laundering has also contributed to improved investor sentiment.