JOHANNESBURG, June 2 – South Africa remains on track to achieve its fiscal objectives despite growing geopolitical tensions and higher energy prices stemming from the conflict in the Middle East, according to senior officials at the National Treasury.
Speaking at an emerging markets conference hosted by Citi, Treasury Director-General Duncan Pieterse said the government remains committed to maintaining fiscal discipline and demonstrating policy credibility even during periods of global economic uncertainty.
According to Pieterse, recent fiscal performance has exceeded expectations, providing authorities with additional flexibility to absorb external shocks without derailing budget targets.
South Africa recorded a primary budget surplus of 1.1% of gross domestic product during the fiscal year ended March 2026, surpassing the government’s earlier forecast of 0.9%.
The surplus marked the third consecutive year in which revenue collections exceeded non-interest spending, reflecting improvements in fiscal management and revenue performance.
The Treasury also emphasized that temporary measures introduced to shield consumers from rising fuel costs would not place additional pressure on public finances.
A fuel levy relief programme implemented between April and June is expected to cost approximately 17.2 billion rand. However, officials said the measure will be fully funded through stronger-than-expected fiscal outcomes recorded in the previous financial year.
South Africa’s economic position before the escalation of tensions in the Middle East also provided a degree of resilience, according to Treasury officials.
The country entered the period with improving economic growth prospects, a relatively balanced current account, a stronger currency, and lower government borrowing costs.
Officials noted that these factors have helped create buffers against volatility in global energy and financial markets.
Another factor supporting the fiscal outlook is the structure of government spending.
The public-sector wage agreement currently in place runs through the 2027/28 fiscal year, reducing the immediate risk of higher inflation translating into significantly higher expenditure commitments.
Treasury officials also highlighted improving debt dynamics.
Government debt is expected to peak during the 2025/26 fiscal year before gradually declining to approximately 76.5% of GDP by 2028/29, reflecting ongoing efforts to stabilize public finances.
State-owned enterprises, historically a major source of fiscal risk, are also showing signs of improvement.
Officials pointed to the recovery of Eskom, which is expected to report a second consecutive annual profit after years of financial difficulties.
The utility has also gone more than a year without implementing nationwide electricity blackouts, reducing pressure on economic activity and government finances.
The Treasury’s latest assessment suggests that while higher oil prices and global uncertainty remain risks, South Africa’s improving fiscal position and stronger institutional framework are helping the country navigate a more challenging external environment.
