Credit ratings agency Moody’s has affirmed South Africa’s Ba2 rating, citing the country’s strong financial sector and external position following a significant political transition. The recent coalition government formed after the African National Congress (ANC) lost its parliamentary majority for the first time in 30 years has fostered a boost in business confidence.
Moody’s highlighted improvements in the country’s financial stability, including reduced power cuts and expectations of lower interest rates, which have positively impacted the economic outlook. According to South Africa’s central bank, these developments have contributed to a more stable financial environment post-election in June.
However, the agency noted that despite these early improvements, South Africa’s economic growth is expected to remain slow, with government debt staying stable but posing balanced risks. Moody’s anticipates that the energy sector will play an increasingly significant role in driving private sector investments.
The agency also expects the new government to pursue structural reforms aimed at addressing growth challenges and managing fiscal pressures, particularly from social demand, interest payments, and state-owned enterprises.