This outlook will coincide with the redemption of bonds, which are maturing and require repayment, averaging approximately 208 billion rand annually in the coming years. To meet these obligations, the Treasury plans fresh debt issuance, to adjust repayment schedules or implement deeper spending cuts.

The Treasury will continue with “bond switches,” allowing investors to exchange bonds nearing maturity for longer-term instruments. While this mitigates short-term repayment pressure, it does not reduce overall debt levels.

Investors have been forecasting reduced weekly bond auction sizes. The Treasury previously signalled cuts would only occur if lower issuance proves sustainable rather than temporary.

In terms of external borrowing, South Africa raised USD 2.6 billion of the projected USD 5.3 billion for 2025/26 from multilateral development banks. It will raise the balance of USD 2.7 billion in global markets.

“Additionally, the Treasury plans to leverage South Africa’s gold and foreign exchange account to ease future borrowing. The buffer stood at 364 billion rand by March 31, well above the target of 260 billion rand. After allocating 50 billion rand from the account earmarked for the current fiscal year, funds totalling 31 billion rand will be utilised in 2026/27 to curb borrowing requirements,” reported Reuters.

Meanwhile, in his Medium-Term Budget Policy Statement (MTBPS) speech, Finance Minister Enoch Godongwana stated that his country’s focus will now be on growing the economy faster and attracting the investment needed to create jobs and improve the lives of all South Africans.

“Two years ago, we committed to stabilising public debt in the current year and then begin to reduce it. Despite a challenging environment of persistently low economic growth, we are on track to achieve this goal. We are also committed to removing South Africa from the Financial Action Task Force grey list. We have delivered on this commitment in just two and a half years. This is thanks to collaboration across government departments, law enforcement agencies and the private sector. Exiting the grey list enhances South Africa’s attractiveness to investors and makes it easier to do business with us,” Godongwana said.

The above-mentioned achievements have helped the government to not only lower the bond yield curve, but also to reduce the risk premium for owning government bonds, resulting in the freefall of debt servicing costs. As per Godongwana, this will lead to an improvement in South Africa’s credit rating.

Foreign participation in domestic bond auctions has grown from 24.8% in April 2025 to 26.8% in September 2025. This increase was supported by lower global risk aversion and improved sovereign risk perceptions, bolstering demand and lowering yields. During this period, credit rating agencies reaffirmed South Africa’s sovereign ratings and outlook, citing progress on fiscal consolidation and stronger external balances.

This has already led to lower debt service costs as debt service costs in the current year will be 4.8 billion rand lower than estimated in the 2025 Budget, supported by lower interest rates, lower inflation and a stronger currency.

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In August 2023, the NDB reportedly issued both R1 billion (USD 53.1 million) five-year bond and R500 million three-year note, as the auction attracted R2.67 billion in bids.

Former Brazil President Dilma Rousseff, who now chairs the NDB, informed the media that the bank was expecting to lend up to USD 10 billion by 2023-end to member countries, with about 30% of funds being lent in local currencies.

These developments come amid the BRICS countries looking at ways to reduce their dependence on the US dollar and the US-dominated financial system.

Kumeshen Naidoo, head of debt capital markets at Absa Group in Johannesburg, told African Business that the NDB’s rand bond offerings were a significant development as the move could help lessen South Africa’s dependence on volatile international capital markets.

“The NDB already has a portfolio of rand assets – they have lent rand for South African social and infrastructure projects before – but they managed to fund that through the international swap and basis markets,” the official said.

“This means they had to convert dollar funding that they raised through their Eurobond sales into rand. In the long run, the cost of that financing is dependent on the volatility of these capital markets – and international swap markets can be quite volatile,” he added further, while stating that the bond sales demonstrated that the NDB now has access “to a more sustainable, more domestic source of rand funding.”

He also observed that these rand bond offerings could boost the development and sophistication of South Africa’s capital market infrastructure in the long run, which has reportedly declined in recent years due to the nation’s worsening domestic economy.

“Similar types of entities [to the NDB] have issued bonds in South Africa before but those transactions have now matured – it’s now been a long time since the likes of the International Finance Corporation (IFC), for example, have accessed the rand markets,” remarked Naidoo.

“What we’ve seen in the South African markets, certainly over the last three or four years, as the South African macroeconomic situation has deteriorated somewhat, is that South African issuers either have had no need for financing or have simply rolled their exposure,” he noted further.

“As a result, some of the larger issuers that used to be active in the South African market either decreased their number of issuances or delisted programmes completely,” the official explained, while expressing confidence that having a new issuer in the form of the New Development Bank could help stimulate greater activity in South African capital markets.

NDB’s credit rating is reportedly significantly higher (AA+ from S&P and AA from Fitch) in South African markets and Naidoo believed that the entry of higher quality bonds into the country could help “drive up quality across the board”.

“It’s a really high-quality credit issuer, and will really set the benchmark, not just in terms of pricing, but certainly in terms of process,” he said, while adding that the NDB move could help drive greater interest in the South African market from international organisations in general.

“Since the NDB announcement, we’ve already received quite a few inbounds from similar entities asking for more guidance around process and information on how the NDB transaction worked,” Naidoo told African Business.

“We think off the back of this, we will see more entities accessing South African debt capital markets – which will be great for investors, ensure a more sustainable source of rand funding for projects in South Africa, and overall will bring broader benefits for the South African people,” he concluded.

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January 4, 2016: The Olympics may still be a few months away, but for savvy holidaymakers there’s never been a better time to visit Brazil than now.

The ongoing recession in South America’s largest economy has seen the real fall in value against sterling by 39% since December 2014, making a visit to Brazil more affordable than a year ago. It means a cool caipirinha in Ipanema’s trendy bars costs £4.50 this winter compared to £6.40 a year ago.

Improving economic conditions in the UK have contributed to the pound outperforming the majority of major currencies in the past year¹, according to latest research from Lloyds Bank Private Banking. Over the past 12 months the pound has increased in value against 48 of the 61 currencies analysed.

But while there were also big increases against the Turkish lira (down 24.2% against sterling) and South African rand (down 23.1%), it’s not all good news for holidaymakers. Those looking for an exotic holiday will find some destinations becoming more expensive. The Seychelles rupee has been the top performing currency against the pound over the last twelve months, rising by 11%, while the Maldives rufiyaa is up 4%.

Biggest losers against sterling

Around 24 of the 61 currencies in the survey have declined in value by over 10% against sterling since December 2014.

Four of the ten largest declines against the pound were recorded against African currencies. Declining copper prices due to softer demand from China and a severe electricity shortage are the biggest reasons for Zambia’s kwacha falling by 61% – the worst performing currency against the pound in the past year. The next largest fall was Mozambique’s metical (-58%), whilst the South African rand (-23.1%) and the Tanzanian shilling (-19%) make up the other African currencies with the largest loss in value. The Mozambique economy has been hit by falling commodity prices whilst the worst drought in South Africa for over two decades has resulted in water and electricity shortages that have hampered the economy.

After the Mozambique metical the next largest fall in value was the Ukrainian hryvnia (-49%) – which continues to be impacted by the military conflict in the eastern part of the country, falling trade with Russia and a worsening economy. The rouble in neighbouring Russia has fallen by -21% against sterling in the past year on the back of record low oil prices and Western sanctions.

The slump in commodity prices, the slowdown of the Chinese economy, high inflation and deteriorating confidence have all weighed heavily on South American economies, with latest estimates showing that the region’s GDP fell by 0.6% annually in the third quarter of 2015. As well as the falling value of the rial, the currencies of neighbouring Columbia (-34%) and Paraguay (-19%) have also fallen sharply.

Where the pound struggled in 2015

Over the year, the pound fell against 13 of the 61 currencies surveyed. As well as the Seychelles and the Maldives, other long-haul holiday destination currencies that have outperformed the pound include the Trinidad and Tobago dollar (3%) and the Dominican Republic peso (1%).

The Israeli shekel (7%) and the Yemeni rial (4%) are two of the other currencies to have risen in value against sterling during the period.

Pound against the G20² currencies

The pound outperformed against twelve of the sixteen currencies in the G20 group of economies. Apart from the Brazilian real, South African rand and the Russian rouble, the biggest losers against the pound include the Turkish lira (-24%), the Mexican peso (-14%) and the Canadian dollar (-13%).

The continuing economic weakness in the euro-zone has seen the euro fall by 10% over the period. However against Britain’s other major trading partners, the US dollar has grown in value by 4% and the Japanese yen is up by 1% against the pound. The dollar has been supported by a strengthening US economy during 2015; on the other hand, the yen has grown in value even though the Japanese economy has contracted for two successive quarters – marking a technical recession.

Richard Musty, International Private Bank Director at Lloyds Bank, commented: “Sterling has performed strongly against the majority of leading currencies in the past year. The pound has gained in value against several currencies that have been adversely impacted by falling commodity prices, a weakening economy and the slowdown in the Chinese economy.

“For British holidaymakers looking to travel to countries such as Brazil, Turkey, South Africa or any of the euro-zone countries, this is great news as the pound will go further. However, those looking at exotic holiday destinations, such as the Seychelles or Maldives, will find their stay will be more expensive.”

To be noted:

¹Based on a survey of 61 currencies covering the period 4th December 2014 to 4th December 2015; rates are averages for the trading day. During the last 12 months the pound rose against 48 of the 61 currencies.

²The Group of 20 (G20) is a group of finance ministers and central bank governors from 20 major economies. There are 19 countries plus the European Union (EU); in all there are 15 currencies in the Group, with Germany, France and Italy part of the Euro-zone, whilst the Saudi riyal is linked to the US dollar.

Data in this release is from Thomson Datastream (as supplied by WM/Reuters) with closing rates as quoted on 4th December 2015.

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