Monday, July 14, 2025

June 27, 2025

South Africa’s Pulled Off A Bit Of A Finance Flex

SA’s finally spending less than it earns - if you ignore the mountain of debt - and investors are paying attention.

[Image: StockCake]

SA’s budget is finally in the green, landing its first back-to-back primary budget surplus in 16 years.

Yup, the country actually spent less than it brought in (if you ignore interest on debt), which is a fancy way of saying: we’re finally living within our means… sort of.

According to the SA Reserve Bank’s Quarterly Bulletin, Mzansi posted a primary surplus of R48.9 billion (about $2.8 billion) for the 2024/25 financial year – or 0.7% of our GDP if you like to speak fluent economist. That’s exactly what Treasury predicted back in May, though it’s still short of their earlier R61 billion dream target. Close, but no cigar.

As the central bank put it, “National government realised a primary surplus of R48.9 billion in fiscal 2024-25, which was higher than the surplus of R33 billion recorded in the previous fiscal year.”

That’s some decent progress and a whole R16 billion improvement.

So how’d we do it? Well, the taxman clearly found his groove. The government raked in R83.4 billion more in revenue this year, hitting a solid R1.8 trillion overall. Apparently, all the main tax categories played their part, which means yes, we’ve all been feeling it.

Looking ahead, Treasury reckons the good times (or rather, the slightly-less-bad times) will roll on, with the surplus expected to grow over the next three years. But debt’s still a beast. Treasury says our debt-to-GDP ratio will chill at around 77.4% by 2025-26 – higher than they hoped, thanks to sluggish growth and “geopolitical tensions” sparked by, wait for it, Donald Trump’s trade war.

Director-General Duncan Pieterse tried to paint the long game in an op-ed last month: “Over time these developments should help contain the growth in debt-service costs, which currently absorb 22 cents of every rand, resources that could otherwise strengthen fiscal buffers and fund services such as health, education and security.”

In plain speak: Nearly a quarter of every rand the government spends goes to paying off interest, not schools, hospitals or keeping the lights on. Grim.

Still, this surplus news is likely to go down well with investors, and maybe even give the new government of national unity something to high-five about. After all the budget-related drama and bickering over tax hikes, this is a rare win.

Oh, and for context, South Africa’s been using the primary budget balance as its North Star since 2021. It’s not a miracle, but hey, it’s something to cling to in the storm.

[Source: Bloomberg via Moneyweb]