Moody’s changed South Africa’s outlook from “negative” to “stable” on Friday, citing the country’s improved fiscal outlook as a reason for the government’s ability to stabilize its debt burden over the medium term.
South Africa’s public finances were in bad shape even before the COVID-19 pandemic, and they took a further hit in 2020, when government revenues were hit by an economic downturn.
The fiscal situation has improved since then, thanks to higher commodity export prices in South Africa.
“Thanks to the government’s fiscal consolidation measures and positive external developments, South Africa’s fiscal position has significantly improved since the pandemic,” the ratings agency said in a statement.
“As a result, the government’s debt-to-GDP ratio is now expected to stabilize around 80% over the medium term.”
The agency said it is keeping South Africa’s rating at ‘Ba2,’ citing the country’s sound financial sector as a reason, citing the country’s low risk and large pool of domestic investors for government borrowing.
