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South Africa likely achieved a primary budget surplus — where revenue exceeds non-interest expenditure — for the first time in 15 years, setting it on a path to arrest further growth in debt that’s already worryingly high.
Preliminary data shows Africa’s most industrialised economy recorded a primary surplus of 0.4% of gross domestic product in the year through March 2024, matching National Treasury’s February forecast, it said in an emailed response to questions. The outcomes also show the preliminary main budget deficit in 2023-24 is 4.6% of GDP, slightly better than the 4.7% of GDP shortfall estimated in February, Treasury said.
The positive data is a boon for the ruling ANC, which opinion polls show risks losing its majority for the first time since coming to power three decades ago in national elections on May 29 because of its mismanagement of the economy.
It will also be welcomed by investors who have expressed concern over South Africa’s rising debt. One in every R5 of revenue goes to debt-service costs, which now absorb a larger share of the budget than basic education, social protection or health, Treasury said in February. The first primary surplus since the financial crisis offers a glimmer of hope that debt stabilisation may be within reach, said Yvonne Mhango, Bloomberg Africa economist.
"But for that goal to be attainable, this data point needs to be the start of a sustainable trend over the next few years," she said.
Treasury in February’s budget said it expects to stabilize debt at 75.3% of GDP in 2025-26 by drawing down on the nation’s Gold and Foreign Exchange Contingency Reserve Account to reduce debt-service costs and introducing a new binding fiscal anchor.
The primary budget balance has been the main fiscal anchor since 2021.
Contributing factors to the positive data include a sizable surplus of R20.8 billion in February’s monthly budget and tax revenues beating estimates, with the South African Revenue Service collecting 1.74 trillion rand in the fiscal year through March.
Final outcomes for the key metrics are due to be published in the medium-term budget policy statement scheduled for October. GDP data for the first quarter, which the statistics agency will announce on June 4, will affect the results.
The Treasury declined to share its GDP projection for the first quarter. Its February forecast of 1.3% expansion for the current calendar year is higher than the International Monetary Fund’s estimate of 0.9%.
