S&P infers South Africa's debt levels could average 80% of GDP

S&P Global Ratings has warned that South Africa's general government debt could remain high, averaging an unprecedented 80% of gross domestic product (GDP) in the three years to 2028.

- SIPHELELE DLUDLA

This would be much higher than the National Treasury's estimate of an all-time high debt-to-GDP of 76.2% in the 2025/26 fiscal year.

Finance Minister Enoch Godongwana has noted the need to avoid a notable rise in borrowing projections, with 2025/6 likely at 76.4% of GDP, 2026/27 at 76.1%, 2027/28 75.9 and 2028/29 at 75.3%.

S&P on Friday, however, said public debt levels will remain elevated than expected given expenditure and revenue pressures, but said the government will continue its fiscal consolidation efforts.

“We expect general government debt, net of liquid assets, will average 80% of GDP in fiscal 2025-2028. This is slightly above government estimates, which forecast debt peaking at 76% of GDP in fiscal 2025 and then falling to 74% by fiscal 2028,” S&P said.

“However, debt levels would be slightly higher without the government's tapping of the Gold and Foreign Exchange Contingency Reserve Account for R150 billion (2% of GDP) over fiscal 2024-2026. Debt servicing costs are a sizable fiscal burden. We expect interest costs will average 20% of government revenue over fiscal 2025-2028.”