Goldman Sachs Group Inc. expects an improvement in South Africa\u2019s public finances to pave the way for a sovereign credit-rating upgrade on Friday, days after Finance Minister Enoch Godongwana delivers a budget update.<\/p>\n\n\n\n
S&P Global Ratings, which assesses South Africa\u2019s long-term foreign debt at BB-, three notches below investment grade with a positive outlook, is scheduled to review the nation\u2019s credit assessment at the end of the week.<\/p>\n\n\n\n
\u201cWe think they\u2019re quite likely to upgrade,\u201d Andrew Matheny, an economist at Goldman Sachs said in an interview.<\/p>\n\n\n\n
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\u2019s fiscal consolidation efforts, that have been marked by large deficits and repeated bailouts to flailing state-owned companies.<\/p>\n\n\n\n
When Godongwana delivers the Medium-Term Budget Policy Statement at 14h00 in Cape Town on Wednesday, the National Treasury is expected to meet or beat its main fiscal deficit forecast. <\/p>\n\n\n\n
In May, the Treasury projected a gap of 4.6% for the 2025\u201326 financial year.<\/p>\n\n\n\n
\u201cThey\u2019re outperforming by a large margin, and likely to be telling a pretty constructive story on the fiscal picture,\u201d Matheny said.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
Rating agencies have laid out three things they\u2019re looking for: slightly better growth, continued fiscal consolidation, and no new state-owned enterprise bailouts, Matheny said. <\/p>\n\n\n\n
\u201cIf our expectations for the MTBPS are confirmed, we think those targets; they are likely to pull the trigger and upgrade.\u201d<\/p>\n\n\n\n
Still, others, such as Citigroup Inc.\u2019s South Africa economist Gina Schoeman, expect an upgrade only next year.<\/p>\n\n\n\n
\u201cWe think S&P\u2019s 14 November credit review is still too early for an upgrade,\u201d she said. <\/p>\n\n\n\n
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 ANC failed to win an outright majority in the 2024 elections, she said. <\/p>\n\n\n\n
A dispute over the national budget earlier this year had threatened its survival.<\/p>\n","protected":false},"excerpt":{"rendered":"
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