The Finance Minister has misled South Africans for over a decade

The South African Finance Minister has promised to reduce South Africa’s debt-to-GDP ratio for over a decade. However, this has never happened.

On 25 February 2026, Finance Minister Enoch Godongwana delivered his latest budget speech at a packed Parliament Dome in Cape Town.

He said they committed to a clear reform agenda and a disciplined fiscal strategy built on three principles: stabilise debt, invest in infrastructure, and spend better.

“For the first time in 17 years, debt will stabilise, and it will continue to fall in the coming years,” Godongwana said.

He added that South Africa’s budget deficit has narrowed significantly, and debt-service costs are also falling.

Godongwana said the country’s gross debt will stabilise as a share of GDP in 2025/26, at 78.9 per cent.

“In 2026/27, it will fall further, to 77.3 per cent of GDP, and decline to 76.5 per cent by 2028/29,” he said.

South Africa’s growing debt burden has been a concern for many years, with economists warning that it is unsustainable.

The state’s gross debt rose from 23.6% of GDP in 2008/2009 to an expected 78.9% in the next financial year.

The escalation in borrowing has led to South Africa’s debt service costs rising significantly over the last 17 years.

In the next financial year, South Africa is expected to pay R432 billion in debt servicing costs. This is R1.2 billion per day.

South Africa, therefore, pays more to service its debt than to fund economic development, peace and security, and health.

The debt servicing costs also rose more than other budget items, which are of great concern to many stakeholders.

Economists are sceptical about debt reduction promises

Given the problem of runaway debt over the last 17 years, many people welcomed Godongwana’s promise to stabilise and then reduce debt.

However, a few experienced economists highlighted that reducing debt is much easier said than done.

Efficient Group Chief Economist Dawie Roodt said the Finance Minister expects the debt-to-GDP ratio to be reduced sharply over the next few years.

“I do not believe this,” Roody said. However, he said South Africa has reached a turning point, which will improve the ratio.

Professor Daniel Meyer from the University of Johannesburg said that the debt ratio would likely deteriorate unless South Africa achieves GDP growth above 3%.

Meyer argued that projected GDP growth levels are insufficient to create large-scale opportunities or to stabilize the fiscal base durably against future shocks.

The Investec economics team highlighted that the debt stabilization might be a fragile window of opportunity rather than a permanent fix.

They highlighted that while real activity (GDP) improved slightly, nominal GDP projections were adjusted lower.

Because debt-to-GDP is a ratio, a lower nominal GDP makes it much harder for the percentage to actually fall.

Jeffrey Dinham, the head of macroeconomics at Econometrix, is even more skeptical, saying South Africans have heard it all before.

He highlighted that over the last two decades, the government has consistently promised that debt levels would decline. However, this did not happen.

Dinham argued that scepticism is always warranted when you look at what the National Treasury says about debt and that it had reached a turning point.

The scepticism is justified

The scepticism around the Finance Minister’s debt reduction promises is justified, considering they have heard the same promise for two decades.

• February 2012 (Pravin Gordhan) – Public debt will stabilise at about 38 per cent of GDP.

• February 2013 (Pravin Gordhan) – Our path of spending and the recovery in revenue will stabilise debt at just higher than 40 per cent of GDP.

• February 2014 (Pravin Gordhan) – Net debt will stabilise at about 45 per cent of GDP in 2016/17.

• February 2015 (Nhlanhla Nene) – Net loan debt of the national government is expected to stabilise at less than 45 per cent of GDP in three years’ time.

• February 2016 (Pravin Gordhan) – Net national debt is projected to stabilise at 46.2 per cent of GDP in 2017/18, and to decline after that.

• February 2017 (Pravin Gordhan) – Government debt will stabilise at about 48 per cent of GDP over the next three years.

• February 2018 (Malusi Gigaba) – The gross debt-to-GDP ratio will stabilize at 56.2 per cent of GDP in 2022/23, and decline thereafter.

• February 2019 (Tito Mboweni) – Gross national debt will still stabilise at about 60 per cent of GDP in 2023/24.

• February 2020 (Tito Mboweni) – Gross national debt is projected to be R3.56 trillion, or 65.6 per cent of GDP by the end of 2020/21.

• February 2021 (Tito Mboweni) – Gross loan debt is expected to stabilise in 2025/26.

• February 2022 (Enoch Godongwana) – The debt ratio will stabilise at 75.1 per cent of GDP by 2024/25.

• February 2023 (Enoch Godongwana) – Government debt will stabilise at a higher level of 73.6 per cent of GDP and in 2025/26.

• February 2024 (Enoch Godongwana) – Debt will now peak at 75.3 per cent of GDP in 2025/26.

• May 2025 (Enoch Godongwana) – In 2025/26, government debt is projected to stabilize at 77.4 per cent of GDP.

• February 2026 (Enoch Godongwana) – Gross debt stabilised as a share of GDP in 2025/26, at 78.9 per cent. In 2026/27 it will fall further, to 77.3 per cent of GDP.

It is clear from these statements why economists are sceptical of the Finance Minister’s promises to stabilize debt.

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Finance Minister’s promise on where debt will stabilize (Debt-to-GDP %)

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