Goldman Sachs on Thursday flagged that South Africa's latest fiscal outturns for the 2025/26 year are likely to prompt favorable rating actions from major credit agencies. The assessment follows the completion of the fiscal year picture with March budget figures, which showed revenue beating the February budget estimate by roughly 0.2 percentage points of GDP while expenditure remained consistent with the estimate, according to a note from Goldman Sachs economist Andrew Matheny.
Matheny said the balance of risks for the Treasury's fiscal deficit estimate - placed at 3.7% of GDP - leans toward outperformance. That view underpins Goldman Sachs' expectation that continued fiscal improvement will translate into sovereign credit rating upgrades over the next year, moving the median rating from BB to BB+.
The note identifies two scheduled sovereign reviews that could reflect the improved fiscal metrics. Goldman Sachs expects Moody's to revise the outlook on its Ba2 rating to positive from stable when it conducts its scheduled review on May 22. Separately, the firm said Standard & Poor's may upgrade its BB rating at its scheduled May 29 review, pointing to the positive outlook S&P has held since November combined with significant fiscal outperformance as the rationale.
The bank's analysis rests on the March budget data completing the fiscal year picture, with the revenue beat and expenditure conformity as the core factual drivers. Goldman Sachs' projection of a move from a BB median to BB+ over the coming year is framed as contingent on continued fiscal improvement along the lines observed in the latest budget results.
Market participants watching sovereign credit actions will be following the scheduled agency reviews closely, given the specific dates cited by the bank. Goldman Sachs' commentary places emphasis on measurable budget outcomes - revenue relative to official estimates and spending adherence - as the primary basis for its outlook rather than broader economic or policy conjecture.
Summary
Goldman Sachs says March budget figures, showing a modest revenue beat and spending in line with expectations, make positive credit agency actions for South Africa more likely. The firm expects upgrades from a BB median to BB+ within the next year and highlights May review dates for Moody's and S&P.