JOHANNESBURG, March 14 – South Africa’s efforts to rein in its growing debt may fall short of government projections, Fitch Ratings warned on Friday, citing continued fiscal pressures and rising expenditure.
The ratings agency acknowledged that the 2025 budget, presented by Finance Minister Enoch Godongwana on March 12, demonstrated a commitment to fiscal consolidation. However, Fitch expressed skepticism about the government’s ability to stabilize debt as planned. According to its latest assessment, South Africa’s debt-to-GDP ratio is expected to keep climbing in the coming years.
The revised budget estimates that government debt will peak at 76.2% of GDP in the 2025 fiscal year, beginning April 1. Fitch’s projections, however, are less optimistic, forecasting debt levels to reach 78.8% of GDP in FY25, up from 77% in FY24, with further increases anticipated in FY26.
“If debt follows the trajectory outlined by the government, it could have a positive impact on the country’s sovereign rating,” Fitch noted. Despite this, the agency maintained a cautious outlook on South Africa’s fiscal position, pointing to persistent risks that could derail debt stabilization efforts.
The amended budget, which scaled back a controversial increase in value-added tax (VAT), has faced strong opposition from major parliamentary parties. The plan had been delayed due to disputes within the ruling coalition, and its latest iteration has failed to garner broad political support.
