South Africa’s fiscal consolidation programme has delivered two years of stabilised debt, but the agencies charged with assessing the government’s execution now differ on whether that stability will hold. Fitch Ratings said on Monday that it expects the country’s debt as a share of GDP to begin rising again in the fiscal year to March 2029, a projection that puts it at odds with both National Treasury and Moody’s Ratings.
The divergence matters because the assessment rests on how the state’s fiscal machinery performs under pressure. Fitch, in its statement, noted that it still expects debt to stabilise at about 78% of GDP over the next two fiscal years. That stabilisation was a key factor behind the agency’s June decision to upgrade South Africa to BB, two notches below investment grade, with a stable outlook.
“Nevertheless, unlike the government, we expect debt to GDP to very modestly rise again” in 2028-29, to 79% of GDP, the agency said. The increase, in Fitch’s view, would be driven mainly by weak economic growth, a bottleneck that constrains revenue collection and narrows the room the Treasury has to execute its consolidation plans.
Finance Minister Enoch Godongwana, presenting the Medium-Term Budget Policy Statement last week, laid out a different delivery trajectory. Debt peaked at 78.4% of GDP in 2025-26, he said, and will decline to 76.6% by 2029-30. That projection frames the Treasury as an operator on track: the peak has passed, and the decline is under way.
Moody’s Ratings backs the Treasury’s reading. The agency, whose measure of debt includes most government guarantees to state-owned enterprises, said on Friday that debt peaked in the last fiscal year and is set for a “clear, albeit gradual” decline. It also judged the budget update to be credit positive, on the grounds that it shows fiscal consolidation remains on track even though conditions have shifted. Higher oil prices, tighter monetary policy and weaker nominal GDP growth than assumed in February have all complicated the operating environment. The consolidation effort has, in Moody’s assessment, held.
That endorsement comes with a caveat about execution risk. Moody’s cautioned that the nation has limited fiscal space to absorb shocks, meaning any operational setback on the fiscal side would be difficult to cushion. Like Fitch, Moody’s has South Africa two notches below investment grade, though with a positive outlook rather than a stable one.
Meanwhile, the two rating agencies will each have an opportunity to weigh the competing projections in the coming weeks. Moody’s next review of South Africa is expected on 27 November, and Fitch’s follows on 11 December. The question before both is essentially one of delivery: whether the Treasury can hold the debt trajectory on the declining path it has mapped out, or whether sluggish growth pushes the ratio back up in 2028-29 as Fitch anticipates.
For now, the operational record shows a consolidation effort that has stabilised debt at roughly 78% of GDP, with Moody’s reading the latest budget update as evidence the programme remains on track. The disagreement centres on the final stretch of the plan. Fitch sees the ratio edging up to 79% in 2028-29; the Treasury projects a fall to 76.6% by 2029-30. The verdict will arrive with the agencies’ scheduled reviews, against the backdrop of a fiscal position that all parties agree leaves little room for error.