Fitch Ratings raised South Africa's credit rating on Friday, citing strong fiscal discipline and lower-than-expected debt, the country's first upgrade in more than two decades.
The agency raised the rating one notch to 'BB' from 'BB-', keeping it below investment grade.
“This upgrade primarily reflects South Africa's record of prudent fiscal management and progress on fiscal consolidation, despite weak economic growth and domestic and external shocks,” the rating agency said.
It said Africa's largest economy has posted primary fiscal surpluses averaging about one percent of gross domestic product (GDP) over the past four years.
It said debt is expected to stabilize at around 80 percent of GDP over the next two years.
The government welcomed the move, saying it was the New York-based agency's first upgrade in nearly 21 years.
“An improved sovereign credit rating helps lower borrowing costs for government, businesses and households and delivers tangible benefits to ordinary people,” Treasury Director General Duncan Peters said in a statement.
In November, South Africa achieved its first major credit upgrade in 16 years, after S&P Global downgraded the country's sovereign rating to “BB” from “BB-“.
Last month, Moody's revised its credit rating outlook for South Africa to positive from stable.
“South Africa still has some way to go to regain its investment grade credit rating, but for the first time in more than a decade we are seeing a clear reversal in the downward trend in ratings,” Pieterse said.
The country's inflation stood at four percent in April due to high fuel prices caused by the US-Israel war against Iran, while unemployment remains above 32 percent.