It’s hard to believe, but journalists do sometimes just get tired of reporting bad news, so it’s with some enthusiasm that I record that two of the major ratings agencies have had good things to say about South Africa recently. But then you read closer, and well … actually the news is not that good after all.
Moody’s did log a change late last month, but it was an outlook change — from stable to positive — not a ratings upgrade. Still, you don’t look a gift horse in the mouth. And then you have to remember that Ba2 is still subinvestment grade, which means it’s still junk by another name.
But look a bit closer and there actually was some real news; Moody’s did predict a better primary surplus figure than most economists had pencilled in. It estimates the figure at about 1% of GDP for financial 2026. Combined with the S&P statement last week confirming this was South Africa’s third consecutive year of rising primary surpluses, that’s a meaningful trend, not a blip. Primary surpluses — where revenue exceeds non-interest spending — are the mechanical precondition for debt stabilisation.
So far, so good. In the Moody’s document, South Africa’s exit from the Financial Action Task Force greylist gets a one-line mention, but that doesn’t mean it’s insignificant. Being on that list was quietly strangling certain categories of foreign investment and correspondent banking relationships. Removal from the list reduces friction in ways that don’t show up dramatically in any single data point but compound over time.
The S&P statement is subtly more interesting than the Moody’s one because it’s a reaffirmation of an existing positive outlook rather than a fresh upgrade. S&P had already moved in November 2025, and that was the genuine milestone, the first upgrade from any major agency in more than 16 years. The latest S&P action is essentially “Yes, we still mean it”.
One interesting detail that the National Treasury underlined is that South Africa is one of only two G20 nations on a positive outlook from S&P (alongside Italy). That’s the kind of stat that sounds impressive until you notice it’s partly a reflection of how badly the Middle East conflict has hit other countries, rather than an absolute measure of South Africa’s strength. But you know, as we say in the Karoo, if it rains, we’ll take it — even if it’s only a millimetre of drizzle.
That’s the kind of stat that sounds impressive until you notice it’s partly a reflection of how badly the Middle East conflict has hit other countries
The GNU durability assumption baked into Moody’s baseline is worth pausing on. It explicitly assumes that the GNU will hold together, driven by “strong incentives among the main parties”. Nice, but in all honesty, I think that’s hope dressed as a baseline. The 2029 electoral cycle risk gets acknowledged and then essentially dismissed, which is interesting and a touch on the optimistic side.
And all of this is prefigured by the movements in the 10-year government bond yields, but there, too, Moody’s says something subtly significant. It notes “the sharp decline in 10-year government bond yields through most of 2025, and the resilience of these yields during the current higher oil price period”. In some ways, that’s important because so many other bond yields have been under pressure during the current oil price rise.
Neither ratings agency engages seriously with the structural ceiling problem. Moody’s Ba2 is two notches below investment grade. The path to investment grade — which is what would unlock the big institutional capital flows — requires not just debt stabilisation but a credible downward trajectory, plus improvement in growth potential, plus a positive labour market, plus infrastructure reforms translating into actual operational gains. Moody’s is explicit that “South Africa’s fiscal strength is likely to remain weak for the foreseeable future”.
This has been said a gazillion times before, but the growth numbers are also quietly sobering. Moody’s projects real GDP growth reaching “around 2%” by 2028 — which, given population growth, implies continuing per capita income stagnation for at least two more years. The government frames this as an improving trajectory. It is. But it’s so small you wonder why it’s not causing a broader policy rethink.
And in a sense, that is the big danger of these incrementally positive comments that we hear so much about: they encourage the illusion that South Africa is definitively on the right path, we just need to be patient to see the results. The truth is that to get results we need to be much more impatient.
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