South Africa’s revised debt-to-GDP ratio has improved the country’s fiscal outlook, raising expectations of stronger investor confidence and potentially lower borrowing costs for government and businesses.
National Treasury announced on Thursday, 5 November, that the country’s debt-to-GDP ratio peaked at 74.6% in the 2025/26 financial year, compared with the previous estimate of 78.4%.
The revision follows Statistics South Africa’s GDP rebasing exercise, which found that the economy was 5.3% larger in 2025 than previously estimated.
The development could strengthen South Africa’s position with international credit-rating agencies, although economists have cautioned that a lower debt ratio does not mean government has reduced its actual debt or that economic growth has accelerated.
National Treasury director-general Duncan Pieterse said the revised figures confirmed that government continued to meet its fiscal targets.
“Our updated calculations confirm that government continues to achieve its fiscal targets, with the fiscal metrics looking even better than we had projected,” Pieterse said
He added that the country was restoring fiscal credibility and seeing benefits through lower borrowing costs and a stronger foundation for investment and growth.
The adjustment is largely statistical. The economy’s measured size has increased, making government debt smaller relative to GDP, without an equivalent reduction in the amount of money government owes.
Dawie Roodt, chief economist at Efficient Group, explained that the revised economic figures affect the debt ratio rather than the underlying amount of government debt.
Roodt said the larger measured economy would bring the debt-to-GDP ratio down to approximately 74% or 75%, from earlier expectations of around 78% or 79%.
However, he questioned whether South Africa could achieve the economic growth needed to improve its longer-term position.
“The real question here is: Is the South African economy going to grow or not?” Roodt said.
Jee-A van der Linde, senior economist at Oxford Economics, also cautioned that the statistical revision does not create the additional economic activity needed to generate employment.
He expects GDP growth to remain weak at around 1% this year and next, according to a client note reported on Thursday.
The improved fiscal indicators could also influence how international rating agencies assess South Africa’s ability to service its debt.
Annabel Bishop, chief economist at Investec, said the revised figures could bring forward a possible credit-rating upgrade by Moody’s.
