Despite government debt having more than tripled since the 2008/09 financial year, Finance Minister Enoch Godongwana says the country’s debt burden is expected to stabilise and debt-service costs will begin to decline over the medium term.
Delivering the national Budget Speech in the Parliament of South Africa in Cape Town, Godongwana said gross debt is projected to stabilise at 78.9% of GDP in 2025/26.
He told lawmakers that the debt ratio is then forecast to fall to 77.3% in 2026/27 and decline further to 76.5% by 2028/29.
The minister explained that this year’s slightly higher debt peak reflects weaker nominal GDP growth, as well as government’s decision to increase borrowing in 2025/26 to take advantage of strong investor demand in both domestic and international markets.
According to National Treasury, debt-service costs have climbed sharply over the past decade, rising from 8.8% of revenue to 21.3% in 2025/26, limiting the funds available for other priorities.
However, Treasury expects this pressure to ease gradually, with debt-service costs projected to decline to 20.2% of revenue by 2028/29.
Officials say progress has been made in restoring fiscal discipline, with the main budget deficit now estimated to be R12.4 billion lower than projected at the time of the 2025 Budget, helped by stronger-than-expected fiscal performance during the first 10 months of the 2025/26 financial year.
Over the next three years, government also expects debt repayments and interest costs to be R21 billion lower than previously forecast in the Medium Term Budget Policy Statement.
While the debt mountain remains sizeable, Treasury maintains that the trajectory is finally bending downward a sign, it says, that the country may be moving from firefighting to firmer financial footing.