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South Africa achieved its first primary budget surplus in 15 years by posting a surplus of R31.6 billion or 0.4% of GDP for the year through March 2024. Finance Minister Enoch Godongwana’s strict funding approach to state-owned companies like Transnet and Eskom contributed to this milestone, with no new bailouts provided in the budget. The decline in non-interest expenditure was driven by lower voted expenditure and limited recapitalization of state-owned companies.
The data revealed in the South African Reserve Bank’s Quarterly Bulletin is encouraging for investors wary of the country’s high debt levels. The Treasury’s plans to draw down on reserves and introduce a new fiscal anchor aim to stabilize government debt at 75.3% of GDP in 2025-26.
With one in every five rand going to debt servicing costs, South Africa is taking necessary steps to curb debt and strengthen its fiscal position, providing hope for a more stable economic future.