MTBPS: Govt on track to stabilise debt; Treasury lowers economic growth projections for 2025

Revenue is up, and debt remains stable, despite weaker-than-expected economic growth.

These are among the main factors that have influenced the medium-term budget policy statement (MTBPS) tabled by Finance Minister Enoch Godongwana in the National Assembly on Wednesday afternoon.

By lowering the inflation target to 3%, Godongwana is hoping for spin-offs that include lower interest rates that will benefit cash-strapped households.

Godongwana was in an upbeat mood on Wednesday, amid less contestation with Government of National Unity partners than earlier this year when he made three attempts to table a national budget.

FULL SPEECH | 2025 medium-term budget policy statement

The main budget primary balance for 2025/26 is expected to outperform the estimates made in May, with revenuefrom the preceding financial year exceeding the 2025 estimate by R19.3 billion, and narrowing the budget deficit by R8.2 billion.

Godongwana said that some of the extra money would be set aside for contingencies, including the local government elections, infrastructure projects and the Madlanga Commission.

The Treasury has, however, lowered its economic growth projections from 1.4% to 1.2% for 2025.

"The growth outlook strengthens moderately over the medium-term. We now forecast real GDP growth will average 1.8% between 2026 and 2028."

Godongwanasaid that government was also on track to stabilise its gross debt to GDP ratio in the current fiscal year.

"Over the MTEF, debt service costs will grow by 3.8% annually. This is a significant reduction from the 7.4% growth anticipated at the time of the 2025 Budget."

To further ensure long-term sustainability of public finances, Godongwana said that government was still considering options for a formal fiscal anchor.

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