South Africa nears fiscal turning point, treasury Chief says

South Africa’s budget will show government debt stabilising relative to gross domestic product for the first time in almost 20 years, said the head of the National Treasury. It will also show a third straight primary surplus, supporting fiscal credibility and economic-growth prospects.

“We are at an important turning point in South Africa’s fiscal trajectory,” Director-General Duncan Pieterse said in an editorial published in Business Day Monday. “Improved fiscal conditions will reduce the cost of servicing our debt, freeing up resources for critical frontline services and investment in public infrastructure.”

The prospect of better metrics has pushed down bond yields, lifted the rand and delivered the first major ratings upgrade in 16 years.

The South African Treasury is working to reverse a deterioration in public finances since the global financial crisis. A series of bailouts for state-owned companies, a high civil servant wage bill and graft contributed to downgrades of South Africa’s credit ratings to junk. The fallout from the coronavirus pandemic further weighed on public finances, while GDP expanded by an average of less than 1% annually over the past decade.

In November, the Treasury projected debt would stabilise at 77.9% in the year through March. Finance Minister Enoch Godongwana will present a new budget with revised estimates on February 25.

Godongwana will also update plans for a formal fiscal anchor, which Pieterse said would help sustain the gains in fiscal credibility over the long term.

In 2021, the Treasury made the primary budget balance its main fiscal anchor, instead of a spending ceiling. It previously said achieving a primary surplus — where revenue exceeds non-interest expenditure — would allow the government to “reconsider the funding of South Africa’s priorities” in a more stable environment.

The Treasury has also reformed consultation processes for the fiscal framework, including formalising talks with members of the country’s coalition government, and discussions about “tough decisions” have already begun, Pieterse said.

Godongwana delivered three budgets early last year, after a dispute over a surprise plan to hike value-added taxes threatened to split the so-called government of national unity. The third iteration, which withdrew the revenue measure, was eventually adopted.

© 2026 Bloomberg

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