Goldman predicts South Africa’s sovereign rating upgrade amid strong budget

Key topics:Goldman Sachs expects South Africa’s credit rating to be upgraded soonUpgrade hinges on fiscal consolidation and meeting budget-deficit goalsS&P review set for Nov. 14; some see upgrade possible only in 2026.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Ntando Thukwana.Goldman Sachs Group Inc. expects an improvement in South Africa’s public finances to pave the way for a sovereign credit-rating upgrade on Friday, days after Finance Minister Enoch Godongwana delivers a budget update.S&P Global Ratings, which assesses South Africa’s long-term foreign debt at BB-, three notches below investment grade with a positive outlook, is scheduled to review the nation’s credit assessment at the end of the week.“We think they’re quite likely to upgrade,” Andrew Matheny, an economist at Goldman Sachs said in an interview.A ratings upgrade would mark a significant milestone for South Africa, improving sentiment toward the country and its assets. It would also signal growing confidence in the country’s fiscal consolidation efforts, that have been marked by large deficits and repeated bailouts to flailing state-owned companies..Read more:.Goldman Sachs and others sue Fed over stress test errors, seeking $18bn in capital relief – Marc Rubinstein.When Godongwana delivers the Medium-Term Budget Policy Statement at 2 p.m. in Cape Town on Wednesday, the National Treasury is expected to meet or beat its main fiscal deficit forecast. In May, the Treasury projected a gap of 4.6% for the 2025–26.“They’re outperforming by a large margin, and likely to be telling a pretty constructive story on the fiscal picture,” Matheny said.His views align with four of nine economists in a Bloomberg survey, including those at Bank of America Corp. and RMB Morgan Stanley, who also expect an upgrade this year.Rating agencies have laid out three things they’re looking for: slightly better growth, continued fiscal consolidation, and no new state-owned enterprise bailouts, Matheny said. “If our expectations for the MTBPS are confirmed, we think those targets; they are likely to pull the trigger and upgrade.”Still, others, such as Citigroup Inc.’s South Africa economist Gina Schoeman, expect an upgrade only next year.“We think S&P’s Nov. 14 credit review is still too early for an upgrade,” she said. But one in 2026 is possible if gross domestic product growth strengthens, supported by higher fixed investment, a stabilized debt ratio, and a more stable government of national unity formed after the African National Congress failed to win an outright majority in the 2024 elections, she said. A dispute over the national budget earlier this year had threatened its survival..© 2025 Bloomberg L.P.

Goldman predicts South Africa’s sovereign rating upgrade amid strong budget

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