News24 Business | SA achieves primary surplus for the first time in 15 years

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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 would 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 its February budget, the Ministry of Finance said it expected to stabilize debt at 75.3% of GDP by 2025-2026.draw a drawingChanged the country’s gold and foreign exchange contingency reserve accounts to reduce debt servicing costs and introduce new binding fiscal anchors.

From 2021 onwards, the primary balance has become the main fiscal anchor.

Factors contributing to the positive data included a huge surplus of R20.8 billion.February monthly budgetandtax revenueThe South African Revenue Service collected R1.74 trillion in the financial year to March, more than expected.

The final results of key indicators are expected to be published 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. February’s forecast of 1.3% growth for the current calendar year is higher than the International Monetary Fund’s forecast of 0.9%.