Goldman Sachs expects an improvement in South Africa’s public finances to pave the way for a sovereign credit-rating upgrade on Friday, days after Finance Minister Enoch Godongwana delivers a budget update.

S&P Global Ratings, which assesses South Africa’s long-term foreign debt at BB-, three notches below investment grade with a positive outlook, is scheduled to review the nation’s credit assessment at the end of the week.

“We think they’re quite likely to upgrade,” Andrew Matheny, an economist at Goldman Sachs said in an interview.

A ratings upgrade would mark a significant milestone for South Africa, improving sentiment toward the country and its assets. It would also signal growing confidence in the country’s fiscal consolidation efforts, that have been marked by large deficits and repeated bailouts to flailing State-owned companies.

When Godongwana delivers the Medium-Term Budget Policy Statement at 2 pm in Cape Town on Wednesday, the National Treasury is expected to meet or beat its main fiscal deficit forecast. In May, the Treasury projected a gap of 4.6% for the 2025–26.

“They’re outperforming by a large margin, and likely to be telling a pretty constructive story on the fiscal picture,” Matheny said.

His views align with four of nine economists in a Bloomberg survey, including those at Bank of America and RMB Morgan Stanley, who also expect an upgrade this year.

Rating agencies have laid out three things they’re looking for: slightly better growth, continued fiscal consolidation, and no new State-owned enterprise bailouts, Matheny said. “If our expectations for the MTBPS are confirmed, we think those targets; they are likely to pull the trigger and upgrade.”

Still, others, such as Citigroup’s South Africa economist Gina Schoeman, expect an upgrade only next year.

“We think S&P’s November 14 credit review is still too early for an upgrade,” she said. But one in 2026 is possible if gross domestic product growth strengthens, supported by higher fixed investment, a stabilised debt ratio, and a more stable government of national unity formed after the African National Congress failed to win an outright majority in the 2024 elections, she said. A dispute over the national budget earlier this year had threatened its survival.