Good news for South Africa after major change
South Africa’s debt-to-gross domestic product ratio was revised sharply lower, the National Treasury said, after a regular exercise to update the data showed the economy was 5.3% larger last year than previously estimated.
Based on Statistics South Africa’s updated numbers, “the debt-to-GDP ratio peaked at 74.6% in 2025-26, down from the 78.4% estimated in the 2026 Medium Term Budget Policy Statement,” the Treasury said in a statement on Thursday. “Other key fiscal ratios have likewise shrunk.”
South Africa’s GDP at current prices was R8 trillion last year, compared with R7.6 trillion previously reported, after the base year for calculating the data was shifted to 2022, Statistics South Africa said last week.
“Our updated calculations confirm that government continues to achieve its fiscal targets, with the fiscal metrics looking even better than we had projected,” Treasury Director-General Duncan Pieterse said in the statement.
“We are restoring fiscal credibility, and South Africa is seeing the benefits in lower borrowing costs and a stronger foundation for investment and growth.”
South Africa’s primary surplus, or revenue minus interest expenditure, was 1.6% of GDP in 2026-27 versus 1.7% projected in the midterm budget last month, rising to 2.8% in 2029-30, the Treasury said.
The main budget deficit in 2026-27 was 3.5% of GDP versus a previously estimated 3.7%.
Analysts said the improved fiscal metrics — watched closely by ratings companies — could have positive implications for South Africa’s credit rating.
Moody’s Ratings suggested this month that an upgrade may be under consideration after the government stabilised debt as a share of GDP.
South Africa’s credit rating has been on an upward path since being relegated to junk status in 2017 amid exploding deficits during the scandal-marred rule of President Jacob Zuma.
Still, the ranking remains two notches below investment grade.
The Treasury, echoing the comment of analysts when the revised GDP data was released, noted that this was a “mechanical” revision based on the new numbers and that it hadn’t revised the assumptions used in its budget estimates, nor changed revenue, spending or debt estimates.
More broadly, while the increase in the nominal size of the economy reduces the size of the debt as a share of GDP, “it does not improve the real economic growth needed to create additional employment,” Jee-A van der Linde, senior economist with Oxford Economics, wrote in a client note.
“We still expect GDP growth to remain subdued, around 1% this year and next.”
The rebasing exercise, which updates the measurement of the economy to reflect major changes in its structure, is generally conducted every five years.
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