MTBPS: Economists expect Finance Minister to table revised inflation target framework

Some economists expect the National Treasury to table the revised inflation target framework when Finance Minister Enoch Godongwana delivers the Medium-Term Budget Policy Statement (MTBPS) on Wednesday.

Godongwana will address members of Parliament and ordinary citizens at 2pm on the government’s possible adjustment to budgets.

It’s the first MTBPS under the coalition government

Economists expect the MTBPS to reflect a slightly brighter fiscal position, with the National Treasury showing progress in stabilising government’s finances.

On the policy announcements, Godongwana could show his cards on the inflation targeting.

In July, the South African Reserve Bank announced 3% as its preferred inflation anchor within existing the 3% to 6% target band.

ALSO READ | MTBPS: Some economists believe Treasury faces difficulty of finding space for growth

Godongwana’s input was absent from the announcement causing some uncertainty and suggesting a lack of coordination between the National Treasury and the central bank.

The fiscal and monetary policy institutions later found common ground, confirming that joint technical work on the new framework was at an advanced stage.

Economist at Sanlam investments Patrick Buthelezi: “Overall, we expect the MTBPS to build on the first GNU [Government of National Unity] budget. We see potential upside surprises from sustained high terms of trade, strong economic growth than anticipated.”

If not during Tuesday’s MTBPS delivery, economists expect an announcement on inflation targeting in the February 2026 budget.

On the downside, Buthelezi said there are still risks to the country’s finances from state-owned enterprises (SOEs), the National Student Financial Aid Scheme (NSFAS) funding shortfalls, social grants and the National Health Insurance (NHI).

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