Treasury Launches $500M Forex Drive After Budget Approval
South Africa’s National Treasury is actively looking for foreign currency funding solutions worth at least $500 million for the 2025/26 fiscal year. This move comes shortly after Parliament passed the long-delayed Appropriation Bill, resolving months of political gridlock that had threatened economic stability.
Coalition Deal Clears Way for Funding Appeal
The Appropriation Bill, approved by Parliament’s lower house on July 23, ended a tense standoff between parties in South Africa’s coalition government. To secure consensus, the ruling African National Congress (ANC) scrapped plans for a VAT increase, and President Cyril Ramaphosa removed a cabinet minister facing misconduct allegations, helping win over the Democratic Alliance (DA) and smaller partners.
Diversifying Currency Funding Options
In a statement released on Friday, the Treasury said the goal is to broaden access to foreign funding without relying on traditional instruments like Eurobonds. The focus is to minimize borrowing costs, reduce risk, and match funding strategies to current market dynamics.
Eligible participants include:
- Primary dealers in South African government bonds
- Global investment banks
- Multilateral financial institutions
- Institutional investors
- Regulated financial entities with large-scale funding capacity
Flexible Instruments and ESG Focus
The Treasury is open to a range of funding instruments, including:
- Bilateral term loans
- Private placements of floating-rate notes
- Repurchase agreements
- Cross-currency swaps
- Structured notes
Proposals for ESG-linked instruments are highly encouraged. This aligns with growing interest in sustainable finance, with $61.9 billion in ESG-labeled emerging market bonds issued in 2025 alone.
Proposal Deadline and Evaluation Criteria
Submissions must be sent in by August 6, and the Treasury will announce selected proposals by August 29. Key criteria include:
- Cost of funds
- Speed of execution
- Resistance to currency fluctuations
- Fit with South Africa’s debt maturity and repayment profile
The Treasury emphasized that this is an exploratory initiative, not a fixed borrowing program. It reserves the right to accept or reject any offers.
Rising Debt and Budget Deficit Forecasts
In May, the Treasury revised its budget deficit forecast to 4.8% of GDP, slightly higher than the 4.6% projected in March. South Africa’s gross public debt is now expected to stabilize at 77.4% of GDP.
Broader Regional Context
South Africa’s funding efforts reflect the wider struggle across Africa to access affordable debt in a challenging global environment. Recently, Angola paused its international borrowing, while Ghana, emerging from default, is turning to domestic capital markets.
Data from Morgan Stanley shows $154.2 billion in sovereign debt issued by emerging markets in 2025 — most of it coming from Eastern Europe and the Middle East, rather than Sub-Saharan Africa.
Conclusion
South Africa’s call for $500 million in forex funding signals a proactive step to safeguard the country’s fiscal path while navigating political and economic headwinds. With the budget impasse resolved and fresh avenues for funding opening up, attention now turns to how quickly and affordably the Treasury can secure new capital on global terms.
