It lifted the rating by a notch to ‘BB’ from ‘BB minus’, keeping it below investment grade.
“The upgrade primarily reflects South Africa’s record of prudent fiscal management and progress on fiscal consolidation, despite weak economic growth and domestic and external shocks,” the rating agency noted.
Fitch Ratings raised South Africa’s credit rating last week to ‘BB’ from ‘BB minus’, keeping it below investment grade, citing stronger fiscal discipline and lower-than-expected debt.
This marked its first upgrade of the country in close to 21 years.
The country has posted primary fiscal surpluses averaging about 1 per cent of the GDP over the past four years.
Debt may stabilise over the next two years.
Africa’s largest economy has posted primary fiscal surpluses averaging about 1 per cent of the gross domestic product (GDP) over the past four years, it said.
Debt is also expected to stabilise over the next two years at around 80 per cent of GDP, it observed.
The South African government welcomed the move. “Improved sovereign credit ratings help to lower borrowing costs for government, businesses and households and have tangible benefits for ordinary people,” the country’s treasury director general Duncan Pieterse said in a statement.
In November last year, South Africa secured its first major credit upgrade in over 16 years after S&P Global lifted the country’s sovereign assessment to ‘BB’ from ‘BB minus’.
Last month, Moody’s revised its outlook on its credit rating for South Africa to positive from stable.
Fibre2Fashion News Desk (DS)
