South Africa’s debt-to-GDP ratio reached a revised peak of 74.6% in the 2025/26 fiscal year, down from the 78.4% estimate previously projected in the Medium-Term Budget Policy Statement, BusinessTech reported.
The adjustment follows a rebasing exercise by Statistics South Africa, which found the country’s economy is roughly 5% larger than earlier estimates suggested. This calculation increased the total estimated size of the economy to approximately R8 trillion, up from R7.6 trillion, according to the National Treasury.
“Our updated calculations confirm that government continues to achieve its fiscal targets, with the fiscal metrics looking even better than we had projected,” said Duncan Pieterse, Treasury Director-General. The Treasury stated on November 5, 2026, that this mechanical revision also improved other indicators, with the 2026/27 main budget deficit now projected at 3.5% of GDP, down from the 3.7% previously anticipated, Bizcommunity reported.
While South Africa’s debt-to-GDP ratio is currently lower than that of the United Kingdom, which stood at 93.2% at the end of the 2026 financial year, the cost of borrowing remains higher for the South African government. On November 10, 2026, the yield on South Africa’s benchmark 2035 government bond was 8.365%, BusinessTech reported. In contrast, the yield on UK 2035 government bonds was 5.2% on November 11, 2026.
This disparity in yields persists because bond markets weigh credit ratings alongside debt ratios. The UK maintains investment-grade status from Moody’s, Standard & Poor’s, and Fitch. South Africa remains in "junk status" with these agencies, though the country currently holds a positive outlook. A higher yield reflects the premium investors demand to hold debt perceived as carrying greater risk.
The UK’s ability to maintain favorable ratings despite higher debt levels is largely attributed to institutional stability. Jari Stehn, chief European economist at Goldman Sachs Research, noted in October 2025 that the UK’s fiscal institutions, particularly the Office for Budget Responsibility, provide a level of independence and discipline that supports better fiscal outcomes.
South Africa’s path toward regaining investment-grade status is tied to its ongoing control over debt levels. Historical downgrades, such as those seen in 2020, were linked by Investec to slow economic growth, political instability, and challenges within the mining sector and Eskom. The government now forecasts a gradual decline in its debt-to-GDP ratio, targeting 76.6% by the 2029/30 financial year.
Why does a larger GDP estimate lower the debt-to-GDP ratio?
The ratio is a calculation of total government debt divided by the total economic output (GDP). When the economy is measured to be larger than previously thought, the same amount of debt represents a smaller percentage of that total output.
What is the outlook for UK government debt?
According to a research briefing from the Office for Budget Responsibility on October 29, 2026, UK government debt is forecast to rise to 97.3% by the end of 2028/29 before declining to approximately 95.6% by the end of 2031/32.
Does a lower debt-to-GDP ratio guarantee a better credit rating?
No, a lower ratio is only one factor. Ratings agencies also evaluate political stability, economic growth prospects, and the strength of fiscal institutions before assigning a credit rating.
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