National Treasury of South Africa Plans Debt Stabilization, Boosts Spending on Education and Infrastructure

The 2024 Medium Term Budget Policy Statement from South Africa’s National Treasury presents a strategy focused on stabilizing the country’s debt and managing fiscal challenges. Debt-service costs are expected to peak at 21.7% of revenue in 2025/26 before declining, while government debt is projected to stabilize at 75.5% of GDP next year. Despite slower revenue growth, primary surpluses are anticipated by 2024/25.

The Operation Vulindlela initiative has implemented 35 reforms to address power cuts, logistics, data costs, water supply, and critical skills attraction, enhancing essential infrastructure. The public service wage bill continues to decrease, falling from 35.7% of consolidated spending in 2013/14 to an anticipated 31.4% by 2027/28.

Economic growth for 2024 is revised down to 1.1%, but a higher average growth of 1.8% is expected between 2025 and 2027. Government spending will rise from R2.4 trillion in 2024/25 to R2.77 trillion in 2027/28, with significant investment in education and culture. Tax revenue is projected to reach R2.3 trillion by 2027/28, supported by enhanced compliance efforts. The government will raise approximately US$15 billion over the medium term from international markets to meet foreign-currency commitments, with an average borrowing requirement of R557.5 billion, or 6.5% of GDP.