Grace Ashiru
On June 5, 2026, Fitch Ratings announced an upgrade of South Africa’s long-term foreign and local currency credit rating from BB- to BB, marking the first upgrade for the country in more than two decades. The decision comes after years of fiscal tightening and policy adjustments that have improved the country’s financial profile. Fitch highlighted the country’s primary fiscal surpluses, which averaged about 1% of GDP over the last four years, as a key driver of the upgrade. This reversal from previous deficits demonstrates a stronger commitment to fiscal discipline by South Africa’s government.
Structural factors also contributed to the upgrade. Much of the government debt is denominated in the local currency, the rand, and features long maturities. This reduces exposure to foreign exchange shocks that have historically caused problems for emerging economies. Additionally, Fitch cited the South African Reserve Bank’s credible monetary policies, which maintain inflation-targeting discipline, giving confidence that the country is managing economic risks prudently. The National Treasury called the move “a vote of confidence in public finances and reform implementation.”
Despite this positive step, Fitch emphasized that the rating remains in the “junk” category, two notches below investment grade. South Africa continues to face high debt-to-GDP levels around 80%, slow economic growth, and structural challenges such as energy shortages, logistic bottlenecks at state-owned enterprises, and high unemployment. Social inequality and political pressures to increase spending also limit further rating improvements, as these could conflict with the fiscal restraint that led to the upgrade.
The Fitch upgrade may reduce borrowing costs for government debt and open access to investment funds that previously required a higher rating. Investors are advised to monitor the country’s ability to maintain fiscal surpluses, implement reforms at companies like Eskom and Transnet, and observe whether other major rating agencies, such as Moody’s, follow Fitch and S&P Global Ratings in improving South Africa’s credit standing.
