South Africa stands a good chance of regaining its investment-grade credit rating within two years, and next week\u2019s mid-term budget could take another step toward that goal, according to Investec.<\/p>\n\n\n\n
The fund manager sees a more than 50% chance that the country will restore its investment-grade rating by 2028, propelled by economic reforms and fiscal discipline that have shifted sentiment after years of being shunned by investors.<\/p>\n\n\n\n
\u201cA sufficiently credible medium-term budget policy statement could support an initial move by Moody\u2019s Ratings and S&P Global Ratings to one notch below investment grade\u201d, said investment strategist Osagyefo Mazwai. <\/p>\n\n\n\n
\u201cIf that progress is reinforced in the 2027 budget and 2027 MTBPS, an investment-grade rating by 2028 becomes achievable.\u201d<\/p>\n\n\n\n
Both ratings companies already have South Africa\u2019s credit assessment on a positive outlook.<\/p>\n\n\n\n
Finance Minister Enoch Godongwana will deliver the mid-term budget update on 21 October and is expected to show continued growth in the country\u2019s primary budget surplus \u2013 a gauge of how much revenue exceeds non-interest expenditure \u2013 amid stronger corporate tax receipts.<\/p>\n\n\n\n
He\u2019s also expected to lay out more details for a fiscal framework to ensure long-term budget discipline that keeps the ratio of government debt as a percentage of gross domestic product under control.<\/p>\n\n\n\n
The mid-term budget \u201cneeds to show that National Treasury is committed to a credible fiscal anchor, that the debt trajectory is moving decisively toward debt-to-GDP reduction, and that debt-service costs have peaked and can decline,\u201d Mazwai said.<\/p>\n\n\n\n
Credit-default-swap spreads suggest that markets are anticipating imminent upgrades to one notch below investment grade, Mazwai said.<\/p>\n\n\n\n
Moody\u2019s, which now rates South Africa Ba2 \u2014 two notches below investment grade \u2014 said earlier this week that the country is headed for its first credit-rating upgrade since 2009, provided it\u2019s fiscal performance continues to improve.<\/p>\n\n\n\n
The nation obtained a full house of junk ratings in 2020 when Moody\u2019s Ratings downgraded its debt assessment, leaving it without an investment-grade assessment for the first time in 25 years.<\/p>\n\n\n\n
More recently, sentiment has been warmed by the Treasury\u2019s success in keeping the budget on track and by the central bank lowering its inflation target to 3% last year, which was subsequently endorsed by Godongwana in a sign of government support.<\/p>\n\n\n\n
That\u2019s helped turn the page for investors after a decade of overspending under former President Jacob Zuma, who\u2019s nearly nine years in office was marred by corruption and mismanagement.<\/p>\n","protected":false},"excerpt":{"rendered":"
Investec is forecasting a more than 50% chance that South Africa will regain investment-grade status by 2028.<\/p>\n","protected":false},"author":59,"featured_media":812760,"comment_status":"open","ping_status":"","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2112102211857588342","_sma_facebook_post_id":"191437357620492_2242045913282474","_sma_instagram_post_id":"18388699645226150","_sma_x_attempts":1,"footnotes":""},"categories":[4],"tags":[17448,1498,9194,26840],"class_list":["post-880347","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-enoch-godongwana","tag-investec","tag-mtbps","tag-osagyefo-mazwai"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/880347","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=880347"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/880347\/revisions"}],"predecessor-version":[{"id":880357,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/880347\/revisions\/880357"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/812760"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=880347"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=880347"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=880347"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}