Favorable terms of trade continue to support South Africa's fiscal and external receipts, though the gains are partly offset by ongoing supply-side constraints to export volumes. While rising inflation and global monetary tightening could accelerate foreign portfolio outflows, a flexible currency and deep capital markets alongside South Africa's net external creditor position will help cushion the external risks, in our view. We forecast that fiscal deficits will remain elevated but gradually narrow to 5% of GDP by fiscal 2025 (year-ending March 2026). We therefore revised our outlook to positive from stable, and affirmed the 'BB-/B' foreign currency and 'BB/B' local currency ratings, on South Africa. On May 20, 2022, S&P Global Ratings revised its outlook on South Africa to positive
