South Africa achieved its first back-to-back primary budget surplus in 16 years, signalling its commitment to fiscal discipline.

Africa’s most-industrialised economy posted a primary surplus — where revenue exceeds non-interest expenditure — of R48.9-billion or 0.7% of gross domestic product in the year through March 2025, the South African Reserve Bank’s Quarterly Bulletin on Thursday showed. That matched the National Treasury’s May budget forecast, but missed its 2024 estimate of R61-billion.

“National government realised a primary surplus of R48.9-billion in fiscal 2024-25, which was higher than the surplus of R33-billion recorded in the previous fiscal year,” the central bank said.

The government increased total revenue by R83.4-billion, to R1.8-trillion during the 2024-25 fiscal year on the back of increased tax collections across all the main categories, the bank said.

The National Treasury in its May budget forecast the primary surplus to grow over the next three years and anticipates the debt to GDP ratio to stabilise in 2025-26 at a higher level than previously estimated of 77.4%, largely because of slower growth because of geopolitical tensions from US President Donald Trump’s trade war.

Over time these developments “should help contain the growth in debt-service costs, which currently absorb 22 cents of every rand, resources that could otherwise strengthen fiscal buffers and fund services such as health, education and security,” Treasury’s Director General Duncan Pieterse said in an opinion piece last month.

The surplus is likely to be viewed positively by investors and the government of national unity which delivered its first budget since its formation a year ago, after months of political wrangling over proposed tax increases.

The data also bodes well for South Africa’s assets, which have had a high-risk premium because of the country’s debt levels.

The primary budget balance has been South Africa’s main fiscal anchor since 2021.