South Africa records first budget surplus in 15 years

South Africa records first budget surplus in 15 years
Pls share this post

Listen to this article
South Africa records first budget surplus in 15 years

For the first time in 15 years, South Africa has achieved a primary budget surplus by adopting a strict approach to funding state-owned companies that have historically strained government finances.

  • South Africa achieved a primary budget surplus for the first time in 15 years
  • The primary surplus was 31.6 billion rand or 0.4% of GDP for the year ending in March 2024
  • Investors may be more inclined to consider South African assets due to the positive economic developments

Africa’s most industrialized economy recorded a primary surplus—where revenue exceeds non-interest expenditure—of 31.6 billion rand ($1.7 billion) or 0.4% of gross domestic product for the year ending in March 2024, Bloomberg reported. This result aligns with the National Treasury’s forecast from February.

READ ALSO  Nigeria’s inflation hits 33.20% in March - NBS

DON’T MISS THIS: South Africa and Nigeria to lose 900 millionaires to migration in 2024

What the Central Bank said:

“The decline in non‐interest expenditure was driven by lower voted expenditure, largely owing to the sharp decline in payments for financial assets, reflecting government’s limited recapitalization of state-owned companies,

According to data released in the South African Reserve Bank’s Quarterly Bulletin, Finance Minister Enoch Godongwana maintained a strict policy on funding debt-ridden state companies such as Transnet SOC Ltd., the ports and railways operator., providing relief only if they meet strict conditions including implementing recovery plans and selling non-core assets. In the February budget, Godongwana offered no new bailouts to state firms.

READ ALSO  MTN takes proactive steps to restore internet services in Ghana

Additionally, the minister reduced the debt-relief funds for state power utility Eskom Holdings SOC Ltd. after it failed to meet the conditions attached to a 254 billion-rand package granted last year, which the company had been accessing in tranches.

DON’T MISS THIS: Top 10 most stressful countries in Africa

The data will likely be well-received by investors who have previously avoided South African assets due to the country’s high debt levels. South Africa’s debt-to-GDP ratio stands at 74.1%, significantly higher than the emerging-market average of 58.9%, and its interest-to-GDP ratio is also notably high.

Currently, one-fifth of South African revenue is allocated to debt-service costs, which consume a larger portion of the budget than basic education, social protection, or health, according to the Treasury’s February budget.

READ ALSO  Nigerians are buying fewer cars while private jet owners exit the country

To address this, the Treasury plans to draw down on the nation’s Gold and Foreign Exchange Contingency Reserve Account and introduce a new binding fiscal anchor, aiming to moderate government debt. The Treasury anticipates the debt will stabilize at 75.3% of GDP by 2025-26.


Pls share this post
Previous articleBoeing says its space mission is ‘going well’ despite its Starliner leaving 2 astronauts stuck on the ISS
Next articleMore protests expected in Kenya despite tax reversal by Ruto