Moody's Affirms South Africa's Ba2 Rating

(Reuters) – Credit ratings agency Moody's (NYSE:MCO) affirmed South Africa's Ba2 rating on Tuesday, highlighting the country's robust financial sector and external position following a recent regime change.

Reduced power cuts and expectations of lower interest rates have improved South Africa's financial stability following successful elections in June, the country's central bank said in November.

The coalition government of national unity (GNU), formed in June after the African National Congress lost its parliamentary majority for the first time in 30 years, has boosted business confidence.

Moody's report states, "The ratings affirmation highlights that despite nascent improvements, South Africa's economy is likely to remain subdued." The agency anticipates the energy sector to increasingly drive private sector investments.

Economic growth is expected to remain slow, with a stable government debt burden and balanced risks. Moody's believes the new government will likely pursue structural reforms to alleviate existing growth bottlenecks and continue fiscal consolidation efforts to manage spending pressures from social demands, interest payments, and state-owned enterprises.

In November, S&P revised South Africa's outlook to positive due to better reforms by the new government.