Moody's Ratings said in a report released on Monday that South Africa's medium-term budget policy statement was positive for the country's credit profile, citing tighter monetary policy, continued fiscal consolidation despite higher oil prices, and weaker nominal GDP growth than assumed in February.

Moody's rates South Africa Ba2 with a positive outlook. The issuer did not announce a rating action.

The government cut its fiscal 2026 consolidated deficit target to 3.9% of GDP from 4.0% in the policy statement, helped by a R17.1-billion upward revision to gross tax revenue.

Moody's forecasts government debt at 84.9% of GDP by fiscal 2028, from about 86.8% in fiscal 2025, saying debt has probably peaked.

Debt affordability remains weak, Moody's said, with interest absorbing 18.8% of general government revenue in fiscal 2025.

Draft legislation to set fiscal rules for budgeting and debt was credit positive, Moody's said, but without a binding numerical target the legislation's credibility would require consistent application.