South Africa’s fiscal story since 1994 has been shaped by a remarkable turnaround in the early democratic era, followed by a return to deficit spending and rising debt after 2008. The years 2007 and 2008 stand out as a rare period in which the country recorded sustained budget surpluses, before global and domestic headwinds reversed the trend.

In the mid-1990s, the new government inherited a debt-to-GDP ratio near 45% and persistent budget deficits. Fiscal consolidation and growth-oriented reforms under Nelson Mandela and Thabo Mbeki steadily improved the balance. By the time of the global economic upswing of the mid-2000s, South Africa had achieved its first budget surpluses for the period 2007 and 2008, an outcome not seen since the formation of the Union in 1910. Debt fell to below 25% of GDP, allowing greater resources to be directed toward service delivery and social investment.

This fiscal strength was, however, short-lived. The global financial crisis of 2008 marked a turning point. As economic growth slowed sharply, South Africa’s budget moved back into deficit and the government responded with increased spending to cushion the downturn. Revenue growth faltered, but spending commitments rose, and the country’s hard-won fiscal gains were quickly eroded.

From 2009 onward, deficits deepened and persisted, with the debt-to-GDP ratio rising year after year. By 2012, debt had surpassed 30% of GDP, then rose above 40% by 2015, and climbed to over 70% by 2024. Interest payments began to crowd out spending on infrastructure and social priorities, while the budget deficit remained stuck above 5% of GDP.

The pattern is clear: the period of surpluses in 2007 and 2008 was enabled by robust growth and policy discipline. When these conditions faltered, deficits returned, and debt surged. South Africa’s experience shows that fiscal strength can be quickly undone by economic shocks and unchecked spending.

Restoring the sustainability seen in the years up to 2008 will require renewed growth and a fresh commitment to budget discipline. Without this, rising debt and entrenched deficits will continue to constrain South Africa’s economic and social ambitions.

Through the lens of fiscal management, South Africa’s fiscal trajectory underscores the need for sustained discipline and growth to maintain long-term economic resilience.