Fitch affirms South Africa’s sub-investment credit rating

Ratings agency affirms SA's long-term foreign-currency issuer default rating at ‘BB~ outlook stable

- SIPHELELE DLUDLA

FITCH Ratings has affirmed South Afri-cas long-term foreign-currency issuer default rating at ‘BB-’ with a stable outlook, citing weak economic growth prospects, rising government debt and high poverty and inequality as the country’s main credit constraints.

In its latest review published on Friday, the ratings agency said South Africa's sub-investment rating was also constrained by the rising government debt/GDP ratio and a rigid fiscal structure that hampers budget deficit reduction.

South Africa slipped further into below investment grade in 2020, with foreign currency ratings reaching a bottom of BBunder Fitch.

However, Fitch said the ratings were supported by a favourable government debt structure with long maturities and mostly local-currency-denominated, strong institutions and a credible monetary policy framework.

Fitch is projecting that South Africa's economy would expand by only 1.2% annually between 2025 and 2027, well below the 3.7% median growth forecast for peers in the same ratings category.

While electricity reforms have reduced load shedding and helped stabi-lise freight volumes, Fitch said structural challenges — including low investment, unemployment and entrenched inequality — continue to weigh on growth.