Godongwana highlights debt-to-GDP milestone, fiscal prudence in post-MTBPS briefing
Finance Minister Enoch Godongwana told a post-budget media breakfast in Cape Town on Thursday that South Africa has reached the peak of its debt-to-GDP ratio, marking a major milestone in the country’s efforts to restore fiscal stability.
Speaking to business leaders and government colleagues, Godongwana said the government’s disciplined approach to public finances has put the country on a sustainable path.
"Debt is not your problem. Debt is your capacity to service that debt. In a growing economy, you’ve got the capacity to service debt."
He added that from the 2026-2027 financial year, debt levels are expected to decline, reflecting the success of consecutive primary budget surpluses.
"We’ve achieved a surplus in the primary balance for three consecutive years. That’s critical to keeping the debt-to-GDP trajectory on the right path."
Godongwana said the government’s strategy relies on fiscal prudence rather than raising taxes or increasing borrowing.
"The only way you can increase revenue is by increasing borrowing or increasing taxes. Those two avenues are closed to us. What then? We’ve got to resort to the most difficult task…to manage expenditure in an efficient way."
He further introduced a new approach called “targeted responsible spending” to cut inefficiencies in state departments.
Reflecting on lessons from the 2024 elections, Godongwana also highlighted the importance of coalition consultation in achieving fiscal targets.
"Nobody predicted before the elections that we are likely to have that outcome…no one planned for working what constitutes a coalition government. Lesson, we learned as we’re going along."
The minister tied debt management to broader macroeconomic stability, saying it has direct benefits for businesses and households.
"A lower debt-to-GDP ratio reduces the cost of borrowing for business, reduces the cost of living for consumers, and creates confidence in our economy."
He also emphasised the role of inflation management in the government’s strategy, noting that current inflation is hovering around 3%, a level he described as beneficial for growth and employment.
Godongwana also spoke about structural reforms, highlighting efforts to improve state capacity while maintaining fiscal discipline.
"We’re not going to repeat that template when we deal with Transnet. We’ll be fixing Transnet, but at the same time, fixing the logistics sector in the country and creating competition."
By achieving debt-to-GDP targets and maintaining disciplined fiscal management, Godongwana signalled that South Africa is on a stable financial path while pursuing reforms to grow the economy and strengthen state institutions.
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