JOHANNESBURG, June 6 (Xinhua) -- The South African National Treasury has welcomed Fitch Ratings' decision to upgrade the country's long-term foreign and local currency debt ratings.
On Friday, Fitch upgraded South Africa's Long-Term Issuer Default Ratings from 'BB-' to 'BB' and maintained a stable outlook.
The agency noted that despite weak economic growth and persistent domestic and external shocks, South Africa has implemented prudent fiscal management and made visible progress on fiscal consolidation.
According to the National Treasury, gross domestic product (GDP) adjustments have left the government's debt-to-GDP ratio well below the levels anticipated when the country was downgraded to 'BB-' in 2020.
The Treasury highlighted that this marks Fitch's first sovereign rating upgrade for South Africa in nearly 21 years, making it only the second G20 nation to be upgraded by the agency this year.
"Improved sovereign credit ratings help to lower borrowing costs for government, businesses, and households, yielding tangible benefits for ordinary people," said Duncan Pieterse, the Director-General of the National Treasury.
"South Africa still has some way to go to regain its investment-grade credit rating, but for the first time in more than a decade, we are seeing a clear turnaround in the downward ratings trend. This turnaround is especially notable because it comes at a time when the global sovereign credit trend is overwhelmingly negative," Pieterse added.
The Treasury emphasized that the upgrade is particularly impressive given the challenging global environment.
Since geopolitical conflicts escalated, Fitch has taken negative rating actions against five separate investment-grade sovereigns, contrasting sharply with South Africa's upward trajectory.
In its assessment, Fitch observed that South Africa has transitioned from primary fiscal deficits to consistent and widening primary surpluses.
The agency pointed out that government debt is stabilizing due to improved revenue collection and disciplined expenditure management. Furthermore, ongoing structural reforms in the energy and logistics sectors are projected to bolster economic growth in the coming years.
In recent years, South Africa has actively driven structural changes to eliminate energy deficiencies, clear logistics bottlenecks, and resolve operational challenges plaguing the domestic transport sector. ■