R1.18 billion goes into a black hole every day in South Africa

Finance Minister Enoch Godongwana said that South Africa’s annual debt-service costs for this financial year are estimated at R432.4 billion.

Put differently, South Africa pays R1.18 billion per day to service its debt, without any benefit to the country.

This was revealed in a Parliamentary question and answer session, where the Minister was asked about South Africa’s debt burden.

He revealed that the gross government debt is projected to amount to R6.33 trillion at the end of the financial year.

This is 77.3% of South Africa’s gross domestic product (GDP), the highest level in the country’s history.

As the debt servicing costs of R432.4 billion could be used productively in other areas, the government is looking to reduce this figure.

“To reduce debt-service costs, the National Treasury has implemented a range of measures,” Godongwana said.

These include fiscal consolidation, bond-switch operations to reduce refinancing pressures, and increased use of concessional funding from multilateral institutions.

It is also looking to use Gold and Foreign Exchange Contingency Reserve Account transfers and cash balances to lower borrowing requirements.

In his latest budget speech, Godongwana said South Africa has reached an important turning point in the management of its public finances.

“For the first time in 17 years, debt will stabilise, and it will continue to fall in the coming years,” the finance minister said.

He added that the budget deficit has narrowed significantly, and debt-service costs are also falling.

South Africa has also been removed from the FATF grey list, secured its first credit rating upgrade in 16 years, and seen borrowing costs ease.

Expert opinion from economist Dawie Roodt

Economist Dawie Roodt said that although South Africa has turned the corner, it is not out of the woods yet, and its finances remain a ticking time bomb.

Roodt, Efficient Group’s Chief Economist, shares his views during a presentation about Finance Minister Enoch Godongwana’s 2026 Budget.

“South Africa’s fiscal accounts are still in deep trouble. We still have to do a lot of things to fix them,” he said.

He highlighted that South Africa still pays R432 billion in interest on its debt each year, making it the third-largest budget expense.

South Africa pays more on interest than it spends on health, peace and security, economic development, and general public services.

“We pay nearly R14,000 per second on interest. Each South African owes more than R100,000 than what you think you owe,” Roodt said.

He added that the state debt is essentially a burden on South African taxpayers and that they will have to repay it in time.