Moody's Ratings has assessed South Africa's updated medium-term budget policy statement as credit positive, citing stronger fiscal consolidation efforts despite rising oil prices and a more restrictive monetary policy environment.

In a report published on Monday, 26 October, the agency also noted that nominal gross domestic product (GDP) growth is expected to come in below February projections. Moody's maintained South Africa's credit rating at Ba2 with a positive outlook, announcing no change to the rating.

The South African government revised its consolidated budget deficit target for the 2026 fiscal year downward to 3.9% of GDP, compared with the previously projected 4.0%. The revision was supported by an approximately US$1.03 billion increase in the gross tax revenue forecast.

Moody's projects that public debt will decline from around 86.8% of GDP in the 2025 fiscal year to 84.9% by 2028, suggesting that the debt level may have already peaked.

Despite this trajectory, the agency cautioned that the government's capacity to service its debt burden remains weak. In the 2025 fiscal year, interest payments absorbed 18.8% of general government revenues.

Moody's also viewed positively, from a credit standpoint, proposed legislation aimed at establishing fiscal rules and public debt management frameworks. However, it warned that without a binding numerical target, the credibility of the framework will depend on its consistent implementation.