The head of South Africa’s budget office, Dr. Mampho Modise, concluded her tenure last week, following a period credited with helping the National Treasury achieve a stabilization of public debt after years of increase.
Dr. Modise’s departure comes as the Treasury projects gross loan debt will stabilize at 78.9% of GDP in the current fiscal year, before entering a period of decline. This marks a significant shift for the country, which has struggled with rising debt levels for nearly two decades. Finance Minister Enoch Godongwana announced the stabilization during his recent budget speech, stating, “For the first time in 17 years, debt will stabilise and it will continue to fall in the coming years.”
The improved fiscal outlook is underpinned by a combination of factors, including steady economic growth, better-than-expected tax revenue, and a reduction in inflation. Tax and non-tax revenue is now estimated at R1.98-trillion, an increase from the R1.95-trillion estimate in the 2025 budget. Notably, mining tax collections rose 29% in 2025, driven by record prices for gold and platinum group metals.
The consolidated budget deficit is also narrowing, decreasing to 4.5% in 2025/26 from 4.7% previously projected. The Treasury anticipates a continued decline over the next three years, reaching 3.1% in 2028/29. This progress has garnered international attention, contributing to South Africa’s removal from the Financial Action Task Force’s greylist and securing its first credit rating upgrade in 16 years.
Economists forecast that the debt-to-GDP ratio will peak at approximately 78% this year, slightly above the National Treasury’s estimate of 77.9%, before decreasing to around 76.9% by 2029. The stabilization of debt is expected to reduce interest payment pressures and free up public funds for investment in areas such as infrastructure, education, and healthcare.
The National Treasury is now focused on implementing a fiscal anchor to solidify these gains. Details of this proposed fiscal rule, aimed at ensuring continued debt reduction, are expected to be released in the coming months. The Treasury’s efforts align with its mandate to manage South Africa’s national government finances and promote economic development, decent governance, and social progress.
As of today, the National Treasury has not announced a successor to Dr. Modise.
