129% – The number that should concern all South Africans

South Africa’s gross public sector debt has reached 129% of its gross domestic product (GDP), which many economists warn is unsustainable and a cause for serious concern.

The Bureau of Economic Research (BER) released a research note which sheds light on South Africa’s indebtedness.

It explained that a country’s debt-to-GDP ratio is a critical indicator of its debt burden and is often used to compare relative debt levels between countries.

South Africa’s finance ministry focuses on the government’s gross loan debt, which is expected to stabilise at 77.4% of GDP in 2025/26.

Gross government debt is expected to increase from R5.69 trillion in 2024/25 to R6.09 trillion in 2025/26 and R6.82 trillion in 2027/28.

It said this debt is slightly higher than projected in the 2024 MTBPS and March 2025 Budget Review, mainly due to lower nominal GDP.

South Africa’s debt-service costs have reached R426 billion, which translates into well above R1 billion per day.

It is the fastest-growing line item in the government’s budget, and higher than most other sectors, including health, basic education, and security.

“The fiscal strategy remains on course so that the government can spend less on debt-service costs and more on critical public services,” the finance minister said.

However, the government’s expected debt-to-GDP ratio of 77.4% in the current financial year does not tell the full story.

The Bureau of Economic Research highlighted that different methods of measuring debt exist, and debt comparisons are often inadequate if the issue of debt coverage is not considered.

Using only one debt measurement may erroneously conclude that one country might seem to have higher debt levels than another. South Africa is a good example.

Based on the different approaches to measuring debt, South Africa’s debt-to-GDP ratio ranges from 69.2% to 129% for 2024/25.

The chart below shows South Africa’s gross and net loan debt-to-GDP ratio from 1994/95 to 2024/25.

South Africa’s debt-to-GDP ratios

Many countries do not fully disclose liabilities. The implication is that merely comparing different jurisdictions based on reported debt-to-GDP ratios is often misleading.

Debt coverage broadly refers to which spheres of government and public institutions are included in the debt calculation and which debt instruments are considered.

In South Africa’s case, the May 2025 National Budget indicates that gross loan debt reached 76.9% of GDP in 2024/25 and estimates it will reach 77.4% in 2025/26.

Depending on how debt is measured and defined, South Africa’s debt levels for 2024/25 range from 69.2% to approximately 129% of GDP.

South Africa’s gross debt-to-GDP ratio, as reported by the National Treasury, has increased from 26% in 2008/09 to an expected level of 77.4% in 2025/26.

However, this encompasses only three of 13 components of debt coverage considered by the IMF’s Debt Sustainability Analyses.

Expanding institutional coverage makes South Africa’s gross debt-to-GDP ratio look completely different.

The IMF estimated that South Africa’s total consolidated gross public sector debt amounted to 131% of GDP in 2021/2222.

The South African Reserve Bank (SARB) estimated that total consolidated gross public sector debt amounted to 129.2% of GDP in the third quarter of 2024.

If South Africa’s total consolidated public debt for 2023/24 is adjusted to only exclude the central bank, the gross debt-to-GDP ratio would be approximately 100.9% for 2023/24.

Depending on the method used, South Africa’s debt-to-GDP ratio for 2024/25 ranges from 69.2% to 129%, as shown in the chart below.