South Africa\u2019s prospects for a credit rating upgrade improved after S&P Global Ratings lifted the nation\u2019s outlook on its debt to positive from stable.<\/p>\n\n\n\n
\u201cThe positive outlook reflects our view that increased political stability following the May general elections and impetus for reform could boost private investment and GDP growth,\u201d S&P said in a statement on Friday.<\/p>\n\n\n\n
The sovereign ratings agency kept the nation\u2019s foreign-currency long-term rating at BB-, three notches below investment grade.<\/p>\n\n\n\n
Business confidence has improved since May 29 elections led to the formation of a new governing coalition that has made economic growth a top priority.<\/p>\n\n\n\n
The so-called government of national unity joins the African National Congress with the centrist Democratic Alliance and several smaller parties. <\/p>\n\n\n\n
The alliance was formed after the ANC lost its majority for the first time since the end of White-minority rule in 1994.<\/p>\n\n\n\n
The GNU has also committed to boosting job creation, reining in public debt and investing heavily in infrastructure.<\/p>\n\n\n\n
\u201cGovernment\u2019s strategy focuses on achieving fiscal sustainability, supporting economic growth and critical social services, and addressing significant fiscal and economic risks,\u201d the Department of National Treasury said in a statement, welcoming S&P\u2019s decision.<\/p>\n\n\n\n
While the Treasury estimates that South Africa\u2019s consolidated budget deficit will widen to 5% of gross domestic product in 2024\/24, compared to a previous projection of a 4.5% funding gap, it still sees debt stabilizing in 2025\/26, albeit at a marginally higher level of 75.5% of GDP.<\/p>\n\n\n\n
S&P said it expects South African GDP growth to increase to 1.4% over 2025-2027 from 1.0% in 2024 as electricity load-shedding has eased.<\/p>\n\n\n\n