Enoch Godongwana’s R68.5 billion win for South Africa

The National Treasury’s fiscal strategy for South Africa is well on track, with the state’s primary budget surplus set to grow to R68.5 billion in 2025/26.

This comes after over a decade of primary budget deficits, i.e. excluding debt-service costs. 

The government ran its first budget surplus in more than a decade in 2023/24 and has managed to maintain this trend in 2024/25 and now 2025/26.

This not only spells good news for the Treasury’s plan to stabilise state debt at 77.9% of GDP in 2025/26, but also sets it on a strong trajectory to reach a surplus of 2.5% of GDP in 2028/29.

In his Medium-Term Budget Policy Statement (MTBPS), delivered on 12 November, Finance Minister Enoch Godongwana revealed the solid turnaround in South Africa’s state finances.

Godongwana said South Africa’s primary budget surplus is set to grow from R68.5 billion in 2025/26 to R224 billion in 2028/29.

This means the surplus will improve from 0.5% of GDP in 2023/24 to 2.5% of GDP in 2028/29.

The minister explained that this growing surplus will enable the government to stabilise and, eventually, reduce its heavy debt burden and the associated debt-service costs.

The government’s growing surplus was aided by improved revenue collection in the 2025/26 fiscal year.

Revenue collection for the first six months of 2025/26 reached R924.7 billion, 9.3% higher than the first half of 2024/25 and R17.5 billion more than projected in the May 2025 Budget.

This is partly attributable to a more efficient taxman, with SARS being allocated an additional R7.5 billion over the 2025 Medium-Term Expenditure Framework period to enhance its revenue collection capabilities.

In addition, the MTBPS attributed the increased revenue collection to once-off collections from corporations and higher household expenditure.

Prior to the MTBPS, economists expected government revenue to increase due to a commodity boom that boosted the profits and, therefore, tax take, from local mining companies.

“These achievements – stronger fiscal balances and lower debt – have important real-world implications,” the Treasury said in the MTBPS. 

“For many years, resources that would otherwise go to providing services have been consumed by the cost of servicing debt.”

“The stabilisation and decline of debt-service costs will reduce this ‘crowding-out’ effect and strengthen government’s ability to allocate resources in line with developmental priorities.”

“Moreover, when government debt and debt-service costs remain elevated over a long period of time, it puts upward pressure on interest rates in the whole economy, making it more costly for households and firms to obtain loans to buy assets, start businesses or build infrastructure.”

To keep this strong momentum going, the government is considering options for a formal fiscal anchor to help ensure that public finances remain sustainable over the long term.