National Treasury said it now plans to lower South Africa’s debt as a share of the economy for the rest of the decade. It said this follows debt stabilising at 78.4% of Gross Domestic Product in 2025/26.
Treasury set out the plan in its Medium Term Budget Policy Statement, known as the MTBPS. It said it would keep growing the primary surplus and narrow the budget deficit.
“Lower debt levels will reduce borrowing costs and improve investor sentiment, supporting higher public and private investment, and stronger growth and job creation,” the MTBPS read.
Treasury said government is on course to meet these goals, despite global market swings. It said price shocks linked to the Middle Eastern conflict had added to uncertainty.
According to the statement, main budget balances for 2025/26 did better than the 2026 Budget estimates. Treasury said this was mainly due to strong revenue collection and lower debt costs.
Treasury said the estimate for tax revenue in 2026/27 has been raised by R17.1 billion. Petroleum royalties were revised up by about R6.8 billion, and departmental revenue is expected to rise by R14.3 billion.
In total, tax and other revenue are R54.1 billion above the 2026 Budget estimate, the MTBPS said. Treasury said the extra money will support approved infrastructure projects and increase the contingency reserve.
The statement said debt costs stabilised at 21.3% of main budget revenue in 2024/25. Treasury projected this would fall to an average of 20.6% over the medium term.
“The growing primary surplus will ensure that the ratio of gross debt to GDP declines,” the MTBPS read. Treasury said lower debt costs would free up money for development priorities.
Treasury forecast that the main budget deficit of 3.7% of GDP in the current year will fall to 2.5% in 2029/30. It said a smaller deficit would help government manage debt that is coming due.
The department said better spending efficiency remains a top priority. It said budget reforms and programme reviews had produced R38.1 billion in savings, which are being moved to priority areas.
Treasury said the Early Retirement Programme is expected to save an average of R4.4 billion a year over the next three years.
The findings of government’s investigations into ghost workers are being put together and will be published in the 2027 Budget, the MTBPS said.
Source: this article is based on reporting by SAnews.gov.za. Image: GCIS via SAnews.gov.za. Written with the help of AI and published by the Tzaneen Voice News desk. See our Editorial Standards.
Kgomotso Maake covers news and politics for Tzaneen Voice. Kgomotso reports on government, Parliament, municipalities, courts, crime and service delivery across South Africa, with a close eye on how national decisions reach towns like Tzaneen and the wider Limpopo province. Stories are written in plain English and focus on the facts: who made the decision, what it means, and what happens next.