Pretoria:The South African government has maintained its commitment to economic progress despite facing multiple global and domestic challenges. This was highlighted in the Medium-Term Budget Policy Statement (MTBPS) delivered by Finance Minister Enoch Godongwana in Parliament.
According to South African Government News Agency, Godongwana emphasized the government's efforts to steer the country away from fiscal instability toward sustainable public finances. The government has limited bailouts for state-owned entities, responsibly funded new commitments, and prioritized investment over unsustainable consumption. This fiscal strategy is beginning to show results, as evidenced by the stabilization of debt projected for the 2025/26 financial year.
Minister Godongwana reported that South Africa has seen positive rating actions from all three major global credit rating agencies, even amid a challenging global environment. The fiscal space created through disciplined budgeting has allowed the government to protect essential services, preserve jobs in critical sectors, and uphold the social wage for vulnerable populations.
Despite these achievements, Godongwana acknowledged that domestic economic activity has lost some momentum, particularly in export-linked sectors. The projected real economic growth for 2026 has been revised down to 1.2% from the previous 1.6%. Nonetheless, growth is expected to rebound to 1.6% in 2027 and reach 2% by 2029. The South African economy's resilience is supported by fiscal discipline and a lower inflation target, which have helped contain borrowing costs and reduce the country’s risk premium.
To enhance economic growth, the government is focusing on implementing structural reforms, strengthening state capability, and delivering public infrastructure. The fiscal strategy is built on four main pillars supporting growth through prudent fiscal policy, improving value for money, reducing debt-service costs, and embedding fiscal sustainability.
Godongwana also introduced draft fiscal anchor legislation for public comment, aimed at ensuring prudent management of public finances across administrations. This legislation will require each administration to commit to its fiscal objectives and report any deviations to Parliament, thus preserving flexibility while strengthening accountability and fiscal discipline.
The South African government remains committed to protecting the country's economic future and fulfilling its constitutional commitments through sustainable fiscal strategies.
