South Africa achieved its first primary budget surplus in 15 years as it took a stern approach to funding state-owned companies that have drained government finances.<\/p>\n\n\n\n
Africa\u2019s most-industrialized economy posted a primary surplus \u2014 when revenue exceeds non-interest expenditure \u2014 of 31.6 billion rand ($1.7 billion) or 0.4% of gross domestic product in the year through March 2024, data in the South African Reserve Bank\u2019s Quarterly Bulletin published on Thursday showed. That matched the National Treasury\u2019s February forecast.<\/p>\n\n\n\n
\u201cThe decline in non\u2010interest expenditure was driven by lower voted expenditure, largely owing to the sharp decline in payments for financial assets, reflecting government\u2019s limited recapitalization of state-owned companies,\u201d the central bank said.<\/p>\n\n\n\n
The data shows that Finance Minister Enoch Godongwana held a firm line on funding to debt-stricken state companies like ports and railways operator Transnet SOC Ltd., providing relief only if they meet strict conditions including implementing recovery plans and selling non-core assets. In his February budget, he provided no new bailouts to state firms.<\/p>\n\n\n\n
The minister also reduced state power utility Eskom Holdings SOC Ltd.\u2019s debt-relief funds, after it failed to meet conditions attached to a 254 billion-rand package it was granted last year that the company has been accessing in tranches.<\/p>\n\n\n\n
The data will be welcomed by investors who\u2019ve shunned South African assets because of its high debt levels. The country\u2019s debt-to-gross domestic product ratio of 74.1% is well above the emerging-market average of 58.9%, as is the nation\u2019s interest-to-GDP ratio.<\/p>\n\n\n\n
One in every five rand of South African revenue goes to debt-service costs, which now absorb a larger share of the budget than basic education, social protection or health, the Treasury said in its February budget.<\/p>\n\n\n\n