South Africa’s mid-term budget review, set for October 30, is expected to show improved public finances, though economists are urging continued fiscal discipline. Finance Minister Enoch Godongwana will deliver his first medium-term budget policy statement, outlining the country’s spending priorities for the next three years under the newly formed unity government.
Experts predict a better fiscal outlook, with government expenditure set to decrease and interest payments on debt likely to ease, thanks to a stronger currency. The country’s early political stabilization efforts and the resolution of prolonged power cuts have also boosted confidence.
The National Treasury reports a budget deficit of 3.3% of GDP for the 2024/25 fiscal year as of August, down from the same period last year. The deficit was initially forecasted at 4.5%, but economists, including Andrew Matheny, Managing Director of Economics Research at Goldman Sachs, believe the government is on track to meet its targets.
Despite revenue shortfalls, reductions in spending and the first tranche of funds transferred from the gold and foreign exchange account have helped lower borrowing requirements. However, there are no expectations of new spending plans, apart from guidance on infrastructure investment and public sector wage increases for 2025.
President Cyril Ramaphosa, who in July promised to boost the economy by prioritizing infrastructure projects, remains focused on job creation. Economists like Maarten Ackerman of Citadel expect the government to allocate resources to initiatives that stimulate economic growth.
The central bank has projected a 1.1% GDP growth for this year, with the potential to reach 3.5% in the medium term, provided necessary reforms are implemented.