By Sizwe Dlamini
The Ministry of Finance has announced that Moody’s Investor Service has upgraded Eswatini’s global credit rating from B3 Positive to B2 Stable.
This upgrade reflects the country’s progress in improving fiscal management and implementing key institutional reforms.
In addition to the global rating, Moody’s has also upgraded South Africa’s market-specific credit rating to B3.za from B2.za, reflecting similar positive trends in the region.
The announcement was made by the Minister of Finance, Neal Rijkenberg, at the Ministry’s conference room during a media briefing yesterday.
What is Moody’s, and Why Does This Matter for Eswatini?
Moody’s Investors Service, commonly known as Moody’s, is one of the world’s leading credit rating agencies. It evaluates the creditworthiness of countries and companies by assigning them a credit rating.
These ratings help investors understand the level of risk when lending money to a country or business. The ratings range from Aaa (the highest quality) to C (the lowest), with higher ratings indicating a lower risk of default.
For Eswatini, the recent upgrade to B2 Stable is a significant signal to global investors that the country is improving its financial stability and economic health. With this upgraded rating, Eswatini is seen as a safer place to invest, which is expected to attract more foreign investment.
Additionally, Eswatini’s bonds, which are loans the government takes from investors, are now considered investment-grade. This makes them eligible for purchase by a broader range of investors, leading to more investment in the country.
Eswatini’s upgraded rating follows a series of important reforms and efforts to clear domestic arrears for goods and services.
The upgrade has important implications for Eswatini’s treasury bonds listed on the Johannesburg Stock Exchange. These bonds are now considered investment grade, making them eligible for purchase by entities that are only permitted to buy investment-grade securities. This could increase market activity and lower borrowing costs for the country, as more investors are eligible to participate.
Eswatini now joins a small group of African countries that have received credit rating upgrades in recent years. The upgrade is testament to the country’s continued progress and commitment to maintaining a stable and robust economy.
“The government remains focused on further strengthening its fiscal policies and working with credit agencies to continue improving the country’s financial standing” he concluded.
Why is This Important for Eswatini?
- Attracting Investment: With this improved rating, Eswatini is seen as a more attractive destination for investors. More global and regional investors will consider putting their money into Eswatini’s economy, leading to growth and development.
- Lower Borrowing Costs: As Eswatini’s credit rating improves, it can borrow money at lower interest rates. This helps the government save money on debt payments, freeing up resources for critical areas such as development, infrastructure, and public services.
- Growing Confidence in the Economy: The B2 rating reflects Eswatini’s strong fiscal position and the government’s successful reforms. These reforms have made Eswatini a more stable and predictable economy, which is crucial for sustainable growth. Investors’ increased confidence will lead to more investment and economic expansion.
- Joining a Positive Trend in Africa: Eswatini is one of a small number of African countries that have seen their credit ratings improve in recent years. This is a clear sign of the country’s strong economic management and reform efforts, further strengthening its position in the global market.
- Better Market Access: The upgrade also affects Eswatini’s treasury bonds. These bonds are now considered investment-grade, meaning they are safer and more appealing to institutional investors. This could lead to more investment in the country’s projects, boosting its economic growth.