By Kopano Gumbi
JOHANNESBURG (Reuters) -South Africa’s National Treasury aims to stick to a balanced fiscal stance under a coalition government, its director-general said on Tuesday, after the African National Congress (ANC) lost its majority in last week’s election.
The ANC has up to two weeks to agree a coalition pact or another form of power-sharing arrangement with other political parties after its share of the vote dropped below 50% for the first time in the post-apartheid era.
Its potential partners diverge widely, from the free-market Democratic Alliance (DA) to the more radical uMkhonto we Sizwe (MK) and the Economic Freedom Fighters (EFF).
Although it may have to agree to some policy concessions or give away some cabinet posts as part of coalition negotiations, analysts do not expect the ANC to cede control of the finance ministry, which determines the country’s fiscal strategy working with the National Treasury.
“A balanced macro-fiscal stance becomes more defensible in an uncertain political environment. And we intend to continue managing the fiscal stance along those lines,” Duncan Pieterse, the top technocrat in the Treasury, told Reuters in an interview.
“I think that our fiscal strategy is achievable, even in a coalition environment,” he said.
The business community has voiced concern over the prospect of the ANC entering a coalition with the EFF, which is calling for the seizure of white-owned farms and the nationalisation of mines and banks, or with former president Jacob Zuma’s MK which also talks about land redistribution without compensation.
But South African markets rallied on Monday as investors bet on the ANC opting for a coalition including the Democratic Alliance.
In the year to March, South Africa’s Treasury managed to achieve a primary budget surplus – where revenue exceeded non-interest expenditure – for the first time in more than a decade.
That could help it arrest a rapid build-up in debt that has worried investors, although Pieterse said it did not give the government any room to deviate from its current fiscal path.
“If you achieve a primary fiscal surplus over a number of years and you start to see debt actually peak and come down, which is what we expect in 2025/26 … then one can start having a conversation about fiscal space,” he said.
The Treasury said in this year’s budget presented in February that gross public debt as a percentage of gross domestic product was at its highest since 1947. Gross debt-to-GDP was seen hitting 73.9% in March, rising to 75.3% in March 2026.
(Reporting by Kopano GumbiEditing by Alexander Winning and Tomasz Janowski)
