In a strategic move to strengthen its fiscal position for the 2025/26 financial year, South Africa’s National Treasury has announced plans to secure a minimum of $500 million through non-traditional foreign currency financing. This initiative follows the recent resolution of a lengthy parliamentary budget impasse that had raised concerns about the country’s fiscal trajectory.
The Treasury’s call for proposals was issued on Friday, shortly after the National Assembly passed the Appropriation Bill on July 23, effectively ending a months-long political deadlock. The budget was delayed due to tensions within the coalition government led by the African National Congress (ANC), which governs alongside the Democratic Alliance (DA) and several smaller parties.
To break the stalemate, the ANC abandoned a proposed value-added tax (VAT) hike, and President Cyril Ramaphosa dismissed a cabinet minister accused of misconduct—moves that were pivotal in securing the DA’s backing for the budget allocations.
“This funding initiative aims to diversify the sovereign’s hard currency funding toolkit beyond a traditional Eurobond, reduce execution risk and minimise the all-in cost of funds,” the Treasury stated, highlighting the need for flexible liability management suited to dynamic market conditions.
Eligible participants invited to submit proposals include primary dealers in South African government bonds, global arranging banks, multilateral finance institutions, institutional investors, and other regulated financial entities with the capacity for large-scale funding.
South Africa’s funding appeal underscores the broader financing pressures facing African nations amid tightening global financial conditions. Earlier this week, Angola announced a pause in its international borrowing plans, and Ghana, having recently exited default, is now prioritizing domestic financing avenues.
While sovereign issuance in emerging markets has reached $154.2 billion so far this year, according to Morgan Stanley, most of that activity has been centered in regions such as the Middle East and Eastern Europe—leaving African issuers with more limited options.
The Treasury has signaled openness to a variety of instruments, including bilateral term loans, private placements of floating rate notes, repo agreements, cross-currency swaps, and structured notes. Proposals incorporating ESG (environmental, social, and governance) elements are especially encouraged, aligning with the $61.9 billion in ESG-labeled emerging market bonds issued to date in 2025.
Evaluation criteria will include the cost of funds, execution efficiency, resilience to foreign exchange volatility, and alignment with South Africa’s existing debt maturity and service profiles. Interested parties must submit proposals by August 6, with selected counterparties expected to be announced by August 29.
The Treasury emphasized that the exercise remains exploratory and does not represent a firm borrowing commitment. According to its revised projections in May, South Africa now anticipates a consolidated budget deficit of 4.8% of GDP—slightly above the 4.6% forecast in March. Gross debt is expected to stabilize at 77.4% of GDP.
