South Africa’s Debt Mountain Casts a Long Shadow Ahead of Mini-Budget

South Africa’s Debt Mountain Casts a Long Shadow Ahead of Mini-Budget

South Africans are bracing for another test of the country’s financial resilience as Finance Minister Enoch Godongwana prepares to deliver the long-delayed Medium-Term Budget Policy Statement (MTBPS) on November 12.

For a government that’s been walking a tightrope between funding essential services and managing ballooning debt, this mini-budget could be a make-or-break moment or at least, a reality check.

A Country Spending More Than It Earns

South Africa’s debt has been growing like an untreated wound. According to the OECD, public debt has ballooned from 31.5% of GDP in 2010 to a projected 77% in 2025, while debt-servicing costs, the interest on what government owes are eating up more than 5% of GDP.

That’s money that could have gone to hospitals, schools, or infrastructure. Instead, it’s going to creditors.

Despite some recent wins, like the country’s exit from the FATF grey list and stronger commodity exports, the bigger picture remains grim. South Africa still spends more than it earns, and while the South African Revenue Service (SARS) is expected to meet its baseline targets, it’s still R35 billion short of additional revenue goals, according to Reuters.

Economist Annabel Bishop of Investec says we shouldn’t expect any major tax shocks this time. “The mini-budget will mostly provide revenue and expenditure updates,” she notes. Spending has eased slightly, but South Africa remains in deficit a symptom of a state trying to do too much with too little.

Politics and Policy Collide

The road to this mini-budget has been unusually rocky. The original February National Budget was pulled at the last minute due to political wrangling over a proposed 2% VAT increase, a move that would have raised prices on nearly everything.

Two revisions later, South Africa’s fiscal roadmap still feels uncertain. And in a country where public trust in government spending has eroded after years of mismanagement and corruption, even the idea of a tax hike is politically radioactive.

Economist Maarten Ackerman of Citadel says earlier fears of global instability, sparked by Donald Trump’s renewed trade tensions, have since eased. “Gold and platinum exports have helped,” he says, “but this recovery is fragile, it’s built on commodities, not productivity.”

The Debt Trap Is Getting Tighter

The OECD’s warning couldn’t be clearer: the more South Africa borrows, the less room it has to grow. Debt servicing has more than doubled over the past decade, and it’s crowding out social spending.

That’s why experts say economic reform, not just fiscal restraint, is key. Cutting red tape, improving state efficiency, and fixing energy and logistics bottlenecks could unlock investment and jobs and in turn, help pay off what we owe.

Ackerman warns, “Without higher growth, all the fiscal discipline in the world won’t save us. The government needs to create an environment where the private sector can thrive.”

What to Watch on November 12

When Godongwana steps up to the podium, markets will be listening closely for signs of discipline over populism. Investors want credible plans to slow borrowing, not just political promises.

And for ordinary South Africans especially those battling rising costs of living, the big question is simple: will this budget make life any easier?

While no tax hikes are expected, belt-tightening across departments seems inevitable. But after years of austerity without visible improvement, patience is wearing thin.

In the end, this mini-budget isn’t just about numbers. It’s about trust, whether South Africans believe their government can manage the nation’s finances responsibly, or whether the country’s debt mountain keeps casting an ever-longer shadow.

{Source: IOL}

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