Goldman Sachs Says South Africa Is on Track for Credit Rating Upgrade

Goldman Sachs says South Africa's stronger-than-expected tax revenue has improved the country's fiscal outlook, increasing the chances of a sovereign credit rating upgrade. Improved government finances and higher corporate tax collections are also boosting investor confidence.

South Africa's tax revenue performance has strengthened the country's fiscal outlook and could pave the way for additional sovereign credit rating upgrades over the next year, according to Goldman Sachs.

The investment bank said recent National Treasury data showed corporate income tax collections reached approximately R385 billion on a semi-annualised basis in June, exceeding both the R345 billion collected during the 2025-26 fiscal year and the R364 billion projected in the February 2026-27 national budget.

Goldman Sachs attributed the improved revenue performance largely to higher profits from mining exports, which have boosted government tax receipts and supported the country's fiscal consolidation efforts.

Andrew Matheny, an economist at Goldman Sachs, said the stronger fiscal data reinforces the bank's expectation that both Moody's Ratings and S&P Global Ratings could upgrade South Africa's sovereign credit ratings within the next year.

Moody's currently assigns South Africa a Ba2 credit rating and upgraded its outlook to positive from stable in May, citing the country's improving fiscal position, the government's commitment to stabilising public finances and progress in implementing economic reforms.

S&P Global Ratings upgraded South Africa's sovereign rating in November, marking the country's first credit rating improvement in two decades. Goldman Sachs believes another upgrade would raise the country's rating to BB+ from BB, a move that could further strengthen demand for South African government bonds and other fixed-income assets.

South Africa has shown continued progress in improving its public finances. The country recorded a primary budget surplus of 1.1% of gross domestic product (GDP) in the fiscal year ending in March, outperforming the National Treasury's 0.9% forecast issued in February.

The latest assessment highlights growing confidence among investors and rating agencies that South Africa's fiscal reforms and stronger revenue collection are improving the country's long-term credit profile, although future rating decisions remain subject to economic conditions and continued policy implementation.

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