While South Africa has stabilised its national debt and finances, government needs to invest its budget to drive growth in the country, says business organisation Business Leadership South Africa CEO Busisiwe Mavuso.

While South Africa’s debt-to-GDP ratio ballooned from under 30% of GDP in 2008 to about 79% in 2025 – when it peaked – the curve is now on a downward trend.

This is owing to the strong discipline in how the National Treasury manages spending across the government by holding the line on unaffordable demands for increased consumption spending, while trying to protect the investment spending that can underpin renewed growth, she says.

Treasury has used the Medium-Term Expenditure Framework guidelines to impose discipline. Additions to the overall budget are only considered once savings have been found. Revenue that exceeds forecasts can only finance temporary needs or debt reduction, not permanent spending.

Further, compensation budgets are capped, which require departments to manage staff numbers within them.

This discipline also meant that government stayed within the spending ceiling it set with each budget and directed windfalls to tackle the debt load.

The premium that investors demand to hold South African government bonds over international benchmarks has narrowed, in part because of a reduced perception of risk, which saves government money it would otherwise be spending on debt service costs, she points out.

The stronger rand has also helped reduce the cost of servicing hard-currency debt while reducing the value of the amount outstanding.

“The missing ingredient is growth. With the economy expected to grow barely above 1% in 2026, there is little momentum to support improving revenues for the government. Government’s ability to beat revenue forecasts is owing to better collection efforts and supportive commodity prices.”

However, all the right ingredients are being gathered to support growth, including the structural reforms implemented in the country's network industries leading to reliable electricity, cheaper data and improved logistics.

Growth is now the major focus of the business-government partnership and the opportunities are becoming clear, Mavuso says.

“A fiscal component that can help is government investment. Despite more than R1-trillion budgeted, spending has consistently fallen short.

“Treasury can redouble efforts to support departments and local government to successfully implement infrastructure projects. I have said in the past that business stands ready to help on this,” she says.

"The Medium-Term Budget Policy Statement will be time to reflect on the progress South Africa has made. There are still important hurdles to overcome, particularly fixing local government’s financial mess and its knock-on effect on the State-owned power utility Eskom balance sheet and local service delivery.

“We are all focused on turning the opportunities created by reform into real growth. But it certainly helps to be able to do so from a stable fiscal position,” she says.