Despite an underperforming economy and having this year's budget challenged twice from within the same cabinet in which he serves, finance minister Enoch Godongwana still has his real GDP growth projection on the upside for the medium-term.
In his budget overview, he estimates South Africa’s real GDP growth to be 1.4% in 2025, 1.6% in 2026 and 1.8% in 2027. This despite the International Monetary Fund (IMF) recently slashing South Africa’s GDP growth outlook to 1%.
It must be noted, as Godongwana told parliament in March, that the National Treasury’s domestic GDP growth figures have consistently outperformed external estimations .
In the foreword to the latest budget overview, Treasury director-general Duncan Pieterse said the budget was being tabled in a difficult international environment, characterised by trade volatility and policy uncertainty.
“As global growth has faltered, South Africa’s economic outlook has also weakened, with GDP expected to grow by only 1.4% in 2025. Global risk and economic weakness reinforce the need for us to put our fiscal house in order.”
Pieterse said South Africa’s fiscal strategy remained on course so the government could “spend less on debt-service costs and more on critical public services”. The government still planned to stabilise debt in 2025/26 at 77.4% of GDP and Pieterse said signs of progress were already emerging.
“For the first time since the 2000s, government is consistently running a primary surplus, where revenue exceeds non-interest expenditure. In time, this growing surplus will reduce rising debt-service costs.
BUDGET 3.0 | We need to put our fiscal house in order: DG Duncan Pieterse
'Success hinges on willingness to act on all roadblocks that stifle investment'
Despite an underperforming economy and having this year's budget challenged twice from within the same cabinet in which he serves, finance minister Enoch Godongwana still has his real GDP growth projection on the upside for the medium-term.
In his budget overview, he estimates South Africa’s real GDP growth to be 1.4% in 2025, 1.6% in 2026 and 1.8% in 2027. This despite the International Monetary Fund (IMF) recently slashing South Africa’s GDP growth outlook to 1%.
It must be noted, as Godongwana told parliament in March, that the National Treasury’s domestic GDP growth figures have consistently outperformed external estimations .
In the foreword to the latest budget overview, Treasury director-general Duncan Pieterse said the budget was being tabled in a difficult international environment, characterised by trade volatility and policy uncertainty.
“As global growth has faltered, South Africa’s economic outlook has also weakened, with GDP expected to grow by only 1.4% in 2025. Global risk and economic weakness reinforce the need for us to put our fiscal house in order.”
Pieterse said South Africa’s fiscal strategy remained on course so the government could “spend less on debt-service costs and more on critical public services”. The government still planned to stabilise debt in 2025/26 at 77.4% of GDP and Pieterse said signs of progress were already emerging.
“For the first time since the 2000s, government is consistently running a primary surplus, where revenue exceeds non-interest expenditure. In time, this growing surplus will reduce rising debt-service costs.
“These costs will consume 22c of every rand collected in revenue in 2025/26 — money that could be better spent to build fiscal shock absorbers and fund health, education and security. Structural reforms are laying the foundation for future prosperity.”
He said transformative changes would make it easier for the state and private sector to invest in the critical infrastructure needed to build the economy and create much-needed jobs.
“Yet success hinges largely on a willingness to act on all roadblocks that stifle investment. This budget projects consolidated spending growth averaging 5.4% annually, from R2.4- trillion in 2024/25 to R2.81-trillion in 2027/28.”
The director-general said revisions to the March 2025 budget review projections reduce anticipated revenue and spending, but departments largely retain their baselines and critical service delivery areas are protected.
“Major reforms to state spending and the budget process are also under consideration. Public spending is inefficient. Previous spending reviews have identified tens of billions of rand in potential savings from poorly performing programmes that can be redirected in future budgets.”
Pieterse concluded by saying concurrent reforms were being prepared to strengthen the budget process as the foundation of sustainable public finances and to expand public participation.
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