Fiscal Triumph or Economic Mirage?

Unpacking the Primary Surplus versus GDP Growth for South Africa

economic mirage

In South Africa’s 2025 budget, unveiled by Finance Minister Enoch Godongwana on 12 March 2025, two key figures stand out: a projected primary surplus of 0.9% of GDP in 2025-26 and a GDP growth forecast of 1.9% for the calendar year 2025.

While both are economic indicators, they tell distinct stories—one a victory for fiscal discipline, the other a tepid signal of broader progress. Understanding their differences reveals why one is hailed as a win and the other dismissed as a statistic, not a solution.

The Primary Surplus – A Fiscal Win

The primary surplus refers to the situation where government revenue exceeds non-interest spending. In simpler terms, it’s the money left over after paying for public services—like schools, hospitals, and roads—but before accounting for the interest on the nation’s debt. The budget forecasts this surplus to rise from 0.5% of GDP in the current fiscal year (2024-25) to 0.9% in 2025-26, eventually reaching 2% by 2027-28 (National Treasury, 2025). Why is this a “fiscal win”? Because it signals that South Africa is finally living within its means, excluding the burden of its R5 trillion-plus debt pile.

For policymakers and economists, this is a milestone. A primary surplus helps stabilise public debt, which is projected to peak at 76.2% of GDP in 2025-26 before easing. It’s a lifeline for a country where debt-service costs gobble up 22% of revenue—more than the education budget (Bloomberg, 12 March 2025). By achieving this surplus, the Treasury can slow the borrowing spiral, freeing up future resources and boosting credibility with lenders and investors. It’s a technical triumph, a sign that the government is wrestling its finances into order after years of deficits.

But here’s the rub: this win is abstract for most. It doesn’t directly create jobs, build houses, or put food on tables. It’s a backroom victory, celebrated in spreadsheets and bond markets, not in factories or townships.

GDP Growth – A Statistic, Not a Solution

Contrast this with the 1.9% GDP growth forecast for 2025, which measures the annual increase in the total value of goods and services produced in South Africa. On paper, 1.9% is an improvement over the anaemic 0.6% average of the past decade (World Bank, 2024). It suggests the economy is inching forward, driven by modest export growth (3.4%) and household spending (1.9%) (National Treasury, 2025). Yet, for the “man in the street”—Sipho the factory worker or Thandi the nurse—this figure feels hollow, a “statistic, not a solution.”

Why? Because 1.9% growth is too feeble to transform lives. South Africa’s population grows at about 1.5% annually (Stats SA, 2023), meaning per capita GDP—the slice of the economic pie per person—barely budges. Unemployment, hovering above 32%, won’t shrink meaningfully at this pace; economists estimate 3-5% growth is needed to dent joblessness (Reserve Bank, 2023). Logistical woes, like crumbling railways and ports, further choke this growth, as the budget itself acknowledges. For Sipho, it’s not enough to secure a raise or fend off layoffs. For Thandi, it doesn’t ease the strain of overcrowded wards or underfunded clinics.
Moreover, this forecast is just that—a prediction, not a guarantee. It’s sandwiched between October’s 1.7% estimate and a 1.7% projection for 2026, reflecting uncertainty rather than momentum. To the average South African, it’s a number on the news, not a tangible shift in their daily grind.

The Core Difference – Scope and Impact

The primary surplus and GDP growth differ in scope and citizen impact. The surplus is a narrow fiscal metric, a government-centric achievement that strengthens the state’s balance sheet. It’s inward-looking, a tool for sustainability that indirectly benefits citizens by averting a debt crisis. GDP growth, however, is a broad economic barometer, reflecting the health of the entire system—businesses, workers, consumers. When it’s as modest as 1.9%, it fails to deliver the widespread relief people need.

Imagine a household analogy where the primary surplus is like a family paying off credit card interest, a quiet relief for the budget. GDP growth is the family’s income rising—but at 1.9%, it’s a paltry raise that doesn’t cover rising rent or school fees. One is a win for stability; the other, too small to feel like progress.

Bridging the Gap for the Man in the Street

For the ordinary South African, the primary surplus of 0.9% is a fiscal pat on the back they will never feel, while 1.9% growth is a promise that doesn’t deliver. The Treasury’s surplus is a medal pinned on a suit in Pretoria, but Sipho’s still counting cents at the till, and Thandi’s still queuing for overtime. Growth at 1.9% is a whisper of hope drowned out by the noise of empty pockets.

A true solution would marry fiscal discipline with robust growth, say 4%, to lift both the state and its people. Until then, one’s a win on paper, the other a statistic on the wind.

Written by:

Dr Chris Blair
Group CFO, Executive Director of Corporate Support
PhD (Leadership and Management), MBA (Leadership & Sustainability), B.Sc.Hons. Chem. Eng.;
Chartered Human Resource Practitioner (SABPP); Master Reward Specialist (SARA); Master of the Institute of Directors (IODSA).
[email protected]