MTBPS boosted market sentiment to set new records - Chris Harmse

THE Minister of Finance Enoch Godongwana in his Medium-Term Budget Policy Statement (MTBPS) has highlighted certain burning issues that analysts, economists, investors, and fund managers were eager to hear.

- 

The inflation target, as was expected, has been lowered to 3% (with a 1% tolerance band on either side) over the next 2 years.

Total government debt is projected to stabilise at 77.9% of GDP this year (higher than expected) before declining to 77% in fiscal 2028-29.

Treasury expects the budget deficit to shrink from 4.7% of GDP in 2025-26 to 2.9% in 2028-29. The primary surplus is expected to increase to 2.5% in 2028-29 from 0.9% in 2025-26.

The government expects the economy to grow at 1.2% in 2025. This is lower than the 1.4% expected in the May main budget. Economic growth is forecast to remain at a modest level of an average of 1.8% over the next three years.

The government is thinking of withdrawing additional tax increases proposed in May (announcement at February 2026 budget). Notable scrapping further VAT increases.

It is budgeted that the weekly borrowing need will be reduced by R750 million per week in 2026.

Financial markets reacted very positively.