Positive and pragmatic MTBPBS reveals improved fiscal stability

SOUTH Africa's 2025 Medium-Term Budget Policy Statement (MTBPS) struck a noticeably positive and pragmatic tone, signalling government's renewed commitment to fiscal sustainability and a pivot from consumption to growth-enhancing investment.

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FINANCE Minister Enoch Godongwana tables the 2025 Medium Term Budget Policy Statement.

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The most significant takeaway from the 2025 MTBPS is National Treasury’s pledge to restore fiscal sustainability and stabilise government debt. Finance Minister Enoch Godongwana announced that government debt is expected to stabilise at an estimated 77.9% of GDP in the 2025/26 fiscal year. This marks the first time since the 2008 financial crisis that the debt-to-GDP ratio is projected to stop growing, a reversal of a 15-year trend of debt accumulation.

A primary budget surplus (where revenue exceeds non-interest spending) of R68.5 billion - or 0.9% of GDP ~ is expected in the current year. This surplus is forecasted to grow over the medium term, providing the foundation for debt reduction.

The overall budget deficit is projected to narrow from 4.5% of GDP in 2025/26 to 2.7% of GDP by 2028/29, a level last seen over a decade ago.

Improved tax collections by the South African Revenue Service (Sars) have resulted in tax revenues exceeding budget estimates by R19.3 billion. This unexpected revenue boost strengthens South Africa’s fiscal position without requiring new tax hikes.

Projections for debt-service costs have been revised lower due to factors like reduced interest rates which has eased pressure on the fiscus and freed up funds for critical services.