South Africa has achieved its first consecutive primary budget surplus in over a decade and a half, underscoring a renewed national commitment to fiscal responsibility amidst global economic uncertainty.
According to the South African Reserve Bank’s latest Quarterly Bulletin, the country posted a primary surplus of R48.9 billion – or 0.7% of GDP – for the 2024/25 fiscal year, matching the National Treasury’s May forecast.
This marks a significant improvement from the R33 billion surplus recorded in the previous fiscal year.
A primary surplus occurs when government revenue exceeds non-interest spending, and it is widely seen as a crucial indicator of fiscal health.
The result falls short of an earlier R61 billion projection, but still represents meaningful progress in budget discipline.
Revenue growth spurs surplus
The primary surplus was driven by an R83.4 billion rise in total revenue, pushing collections to R1.8 trillion.
According to the Reserve Bank, this was supported by strong performance across all major tax categories.
“This surplus is a testament to improved revenue collection and expenditure control,” the central bank noted.
Long-term impact and investor sentiment
The National Treasury expects the primary surplus to continue growing over the next three years, with hopes that this will stabilise the debt-to-GDP ratio at 77.4% by 2025/26 – a higher level than previously forecast, largely due to slower growth stemming from global geopolitical pressures, including lingering impacts from US President Donald Trump’s trade policies.
Debt servicing costs remain high, consuming 22 cents of every rand, Treasury Director General Duncan Pieterse warned in a recent opinion piece.
However, he noted that sustained surpluses could gradually reduce this burden and free up resources for essential services like education, health, and public safety.
Political and market implications
The news comes as a boost for South Africa’s new Government of National Unity, which presented its first full-year budget after prolonged coalition negotiations. Investors are expected to respond positively, especially given that concerns over South Africa’s debt trajectory have long kept local assets trading at a premium.
“This achievement strengthens our fiscal anchor and helps restore market confidence,” Treasury officials stated, pointing to the primary budget balance as the country’s main fiscal guidepost since 2021.
With another surplus under its belt, South Africa takes a cautious, but critical step forward in securing long-term economic stability.
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