<\/p>\n
South Africa posted a third consecutive primary budget surplus, underscoring the government\u2019s commitment to repairing state finances.<\/p>\n
The continent\u2019s largest economy recorded a better-than-expected surplus of 1.1% of gross domestic product in the year through March, surpassing the National Treasury\u2019s February forecast of 0.9%, Director-General Duncan Pieterse said at a Citibank conference on Tuesday. A primary surplus excludes interest costs on public loans.<\/p>\n
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SA\u2019s reform success creates options in a disrupted global order
Small victories, big message: SA\u2019s fiscal fortunes are shifting<\/p>\n
Government debt has now stabilised and is forecast to decline this year and over the medium term, Pieterse said, marking a key milestone in South Africa\u2019s fiscal consolidation efforts. In the February budget, Finance Minister Enoch Godongwana forecast debt would peak at 78.9% of GDP before easing to 68.3% by 2033-34.<\/p>\n
\u201cThe primary surplus is forecast to grow,\u201d he said.<\/p>\n
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In addition, tax and non-tax revenue was higher than expected when the budget was announced, while spending was lower, including on debt-service costs. This showed the government\u2019s ability to increase revenue and contain expenditure as needed to reach its targets, Pieterse said.<\/p>\n
The main budget deficit ended the 2025-26 fiscal year at 4.3% of GDP, compared with a previous estimate of 4.6%, and is projected to fall to 3.1% by 2029, he said.<\/p>\n
The stronger fiscal performance reflects Godongwana\u2019s determination to rein in public finances. Since taking office in August 2021, he\u2019s largely resisted bailouts for debt-laden state companies unless they agreed to implement structural reforms, while maintaining tight control over government spending.<\/p>\n
The fiscal discipline may pave the way for credit-rating upgrades from Fitch Ratings, Moody\u2019s Ratings and S&P Global Ratings over the next year, Bank of America Corp analysts Tatonga Rusike and Raghav Adlakha said in a note to clients on Monday.<\/p>\n
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SA\u2019s reforms held under global pressure, but the work isn\u2019t done
Moody\u2019s lifts outlook on SA insurers to positive
Expectations grow for SA credit ratings upgrades<\/p>\n
Moody\u2019s recently revised South Africa\u2019s outlook to positive, while affirming its Ba2 rating, two notches below investment grade. S&P maintained its BB rating, also two levels below investment grade, and retained a positive outlook after upgrading the country in November.<\/p>\n
Treasury\u2019s twin objectives of stabilising and reducing the debt-to-GDP ratio while increasing the primary surplus \u2014 the de facto fiscal anchors in recent years \u2014 will be reinforced by the introduction of a formal rule, Pieterse said.<\/p>\n
\u201cThis will provide a permanent, binding mechanism to lock in the fiscal gains achieved in recent years, strengthening policy credibility and further lowering our risk premium,\u201d he said.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n<\/p><\/div>\n
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