(Javier Guerci/Getty Images)
South Africa is likely to achieve its first primary surplus in 15 years (where revenue exceeds non-interest expenditure) and is on track to prevent further increases in its already worryingly high debt.
Preliminary data shows Africa's most industrialized economy will record a primary surplus of 0.4% of gross domestic product (GDP) in the year to March 2024, higher than Treasury forecasts in February. in response to an emailed question. The results also showed that the provisional major fiscal deficit for 2023-24 will be 4.6% of GDP, slightly better than the shortfall of 4.7% of gross domestic product (GDP) estimated in February. the Ministry of Finance said.
The positive data is a boost for the ruling ANC, which, according to opinion polls, is at risk of losing its majority in the May 29 national election for the first time since it came to power 30 years ago due to mismanagement of the economy. .
It will also be welcomed by investors who have expressed concerns about South Africa's rising debt. In February, the Treasury said that one in five R of revenues goes to debt servicing, which currently accounts for a larger share of the budget than basic education, social protection and health. Yvonne Mango, Bloomberg's Africa economist, said the first primary surplus since the financial crisis offers a glimmer of hope that debt stabilization may be within reach.
“But for that goal to be achievable, this data point needs to be the start of a sustainable trend for years to come,” she said.
In February's Budget, the Treasury will draw down the country's gold and foreign exchange emergency reserves to reduce debt servicing costs and introduce a new binding fiscal anchor, which will extend beyond 2025-2026. The outlook is to stabilize debt at 75.3% of GDP.
From 2021 onwards, the primary balance has become the main fiscal anchor.
Factors contributing to the positive data include a large surplus of R20.8 billion in February's monthly budget, and a higher-than-expected tax revenue collection with the South African Revenue Service collecting R1.74 trillion in the financial year to March. There are many things that can be mentioned.
The final results of key indicators are expected to be announced in the medium-term budget policy statement scheduled for October. The first quarter gross domestic product (GDP) statistics to be released by the National Statistics Agency on June 4 will have an impact.
The Ministry of Finance declined to release GDP forecasts for the first quarter. The outlook for current calendar year growth in February is 1.3%, higher than the International Monetary Fund's forecast of 0.9%.
