✅ Treasury Aims for Innovative Foreign Currency Financing
South Africa’s National Treasury is now looking to raise at least $500 million in foreign currency funding for the 2025/26 financial year, following the resolution of a long-standing budget standoff in Parliament.
This call for funding was officially made on Friday, just two days after the Appropriation Bill was passed on July 23 by the National Assembly, ending months of political gridlock that had raised concerns over fiscal stability.
🤝 Coalition Deal Unlocks Fiscal Progress
The breakthrough came after the African National Congress (ANC), governing through a coalition with the Democratic Alliance (DA) and other smaller parties, agreed to key compromises. These included:
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Dropping a proposed VAT hike
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Firing a minister accused of misconduct, which helped secure DA’s support
These moves allowed the smooth approval of departmental budgets, unlocking the next phase of fiscal planning.
💼 Treasury Seeks Flexible, Low-Risk Funding Alternatives
The Treasury is exploring creative financing options that go beyond the usual Eurobond route. The goal is to diversify funding sources, reduce financial risk, and minimize borrowing costs.
According to the Treasury, this initiative will be used to manage South Africa’s foreign debt obligations while adjusting to changing global market conditions.
📢 Who Can Apply?
Only selected financial entities are invited to submit proposals, including:
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Primary dealers in South African government bonds
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International investment banks
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Multilateral finance institutions
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Institutional investors
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Other regulated financial organizations with capacity to fund at scale
💰 Types of Funding Instruments Accepted
The Treasury is accepting proposals for a wide range of funding tools, such as:
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Bilateral term loans
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Private placements of floating-rate notes
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Repo agreements
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Cross-currency swaps
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Structured notes
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ESG-linked financial instruments (strongly encouraged)
This aligns with global trends, as $61.9 billion in ESG bonds have been issued by emerging markets so far in 2025.
📊 Evaluation Criteria & Timeline
Proposals will be judged on:
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Cost of funds
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Speed of execution
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Stability against currency volatility
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Fit with South Africa’s debt service calendar
🗓 Proposal Deadline: August 6, 2025
🗓 Expected Decision Date: August 29, 2025
Note: The Treasury emphasized that this is an exploratory initiative—not a guaranteed borrowing plan. It reserves the right to accept or reject any proposals.
📉 Fiscal Outlook: Deficit Revised, Debt High
In May’s revised fiscal outlook, South Africa’s budget deficit was increased to 4.8% of GDP, up from 4.6% projected in March. Gross national debt is expected to stabilize at 77.4% of GDP, reflecting ongoing fiscal pressures.
🌍 Africa’s Funding Struggles in Global Context
South Africa’s move highlights a broader challenge facing African economies: limited access to affordable debt. Other nations like Angola have paused international borrowing, and Ghana, which recently exited default, is now turning to domestic markets for financing.
So far in 2025, emerging market countries have issued $154.2 billion in sovereign debt, with most of that concentrated in the Middle East and Eastern Europe, according to Morgan Stanley.
📌 Summary
South Africa’s Treasury is taking a strategic step toward securing foreign funds with lower risk and better returns. With the budget impasse resolved, the government is pushing forward to manage its debt wisely in a challenging global economy.
