South Africa is on track to meet key fiscal targets, Treasury says

Source: Reuters.

"We are in a period of fairly healthy budget dynamics," director-general Duncan Pieterse said in an interview. "Our expectation is that we will meet our primary balance target and we will meet our debt-to-GDP target."

Africa's biggest economy has struggled to curb rising public debt after more than a decade of runaway spending that outpaced revenue growth.

But this year the fiscal picture looks much better, with Treasury data for the first five months of the 2025/26 financial year showing revenue is up more than 10% and spending only about 4%.

Pieterse said spending had slowed in part because of the protracted approval of this year's main budget, which was held up for months by political wrangling between the two main coalition partners, the African National Congress and the Democratic Alliance.

"There was a little bit of uncertainty at the beginning of the year because we were still busy finalising the budget and our sense is that uncertainty has found its way through into spending," said Pieterse.

Curbing debt growth

Another factor keeping a lid on spending is tighter controls around social grants, which is a major budget item as nearly one in three South Africans are recipients of state welfare payments.

South Africa's debt-to-GDP ratio, a widely used measure of a country's ability to repay its debt, shot up from 26% in 2009 to 77% in 2025. But it should now stabilise before declining, Pieterse said.

The Treasury hopes to grow its primary budget surplus, where revenue exceeds non-interest expenditure, to help push down debt and free up more money for public services like health and education and spending on things like infrastructure that could potentially raise the country's growth rate.

Finance Minister Enoch Godongwana will present a mid-year fiscal review on Wednesday, 12 November, when he will give updated revenue and spending projections for this year and the three subsequent years.