For the first time in more than a decade, South Africa’s public debt-to-GDP ratio has stopped rising.That is the central claim of Finance MinisterEnoch Godongwana’s 2026budget. After years in which deficits widened, borrowing escalated and upward revisions became routine, the treasury projects that gross debt has peaked at 78.9% of gross domestic product and will begin a gradual decline over the medium term. The projected descent is gradual.
The consolidated deficit narrows from 4.5% of GDP to 3.1%. The primary surplus strengthens above 2% of GDP and borrowing requirements will fall sharply relative to earlier projections.The movement is measured. But it marks a break from fiscal drift.
For much of the past decade, weak economic growth, support to strugglingstate-owned enterprisesand pandemic borrowing pushed the debt ratio steadily higher. Interest payments rose alongside the stock of debt. Debt service costs now absorb more than one in every R5 collected in main budget revenue.
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That share has limited room for expansion in social and capital spending. Stabilising the ratio does not reverse that history. It does not reduce the nominal debt stock.
It does, however, change trajectory. A debt ratio that peaks and declines, even modestly, signals restored control over the sovereign balance sheet. It narrows the premium investors demand for holding South African debt.
On the arithmetic, the consolidation path appears internally coherent. The budget was a “very credible, market-friendly budget with relatively conservative assumptions that will be liked by both the equity and bond markets”, said Johann Els, the chief economist at PSG Financial Services. The treasury, he said, had reinforced a consolidation path that markets had only recently begun to accept as durable.
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