Godongwana talks up growth, stability in MTBPS 2025

He presented a cautiously optimistic economic outlook and a clear strategy for fiscal stability, infrastructure investment, and long-term growth.

"Two years ago, we committed to stabilizing public debt and removing South Africa from the FATF grey list — goals we have achieved through coordinated action across government and the private sector,” the minister told MPs.

"Exiting the grey list enhances our attractiveness to investors and makes it easier to do business with us.

Addressing the National Assembly, Godongwana emphasised that South Africa faces a complex domestic and global environment, marked by low growth, persistent unemployment, and geopolitical uncertainty. 

Despite these challenges, he highlighted progress in stabilising public finances, implementing structural reforms, and strengthening South Africa’s position on the global stage.

"Two years ago, we committed to stabilizing public debt and removing South Africa from the FATF grey list — goals we have achieved through coordinated action across government and the private sector.

"Exiting the grey list enhances our attractiveness to investors and makes it easier to do business with us."

Economic and fiscal outlook

The MTBPS projects real GDP growth of 1.2% for 2025, more than double the rate recorded in 2024, with medium-term growth expected to average 1.8% between 2026 and 2028.

Structural reforms in energy, logistics, water, and local government are central to improving growth prospects, Godongwana said.

"Our goal is to accelerate economic growth to create jobs and reduce poverty at the scale required, structural reforms, particularly in energy and logistics, are key to lifting our rate of growth closer to the levels demanded by our developmental needs."

In a major announcement, the minister revised South Africa’s inflation target to 3% with a 1-percentage-point tolerance band, down from the previous 3–6% range.

"This new target will decrease inflation expectations and create room for lower interest rates, lower rates will support household spending and business investment, boosting growth and job creation. The short-term fiscal costs are outweighed by the long-term benefits."

The fiscal outlook is equally encouraging: government debt is expected to stabilise at 77.9% of GDP in 2025/26, the first time since the 2008 financial crisis that public debt will not grow as a proportion of the economy. 

Revenues have exceeded estimates by R19.3 billion, while debt-service costs are down by R4.8 billion, freeing resources for priority spending.

"We are on track to restore fiscal sustainability, this year, we will achieve a primary budget surplus of R68.5 billion, which will grow to R224 billion by 2028/29,” Godongwana predicted. 

-Targeted spending and infrastructure investment-

Godongwana emphasised that the government is shifting from consumption to investment, with capital payments projected to grow 7.5% over the medium term. 

New guidelines for public-private partnerships (PPPs) and unsolicited bids aim to unlock private-sector investment in energy, transport, water, and logistics projects.

"We are leveraging public resources to mobilize private finance and expertise at scale to strengthen service delivery and drive higher economic growth," he said.

Among the key infrastructure initiatives include:

A new infrastructure bond to raise at least R15 billion for public projects.

Expansion of electricity transmission through private investment to enhance energy security and decarbonization.

Revitalization of freight logistics and port efficiency, unlocking an estimated R200 billion in investment over the next five years.

Water infrastructure projects, supported by US$12 billion in commitments secured at the Africa Water Investment Summit.

Godongwana also announced that municipalities with capacity constraints will benefit from indirect delivery models through agencies such as MISA and DBSA, while building long-term capability to deliver basic services.

'We are ensuring that essential services reach communities reliably, while building municipal capability for the long term."

-Revenue, taxation, and combating illicit trade-

The minister highlighted stronger-than-expected tax collections, including VAT and corporate taxes, allowing for additional spending this year, including R2 billion for rebuilding Parliament and R1 billion for the 2026 municipal elections.

"Illicit trade continues to rob the fiscus of billions, we are clamping down on illegal cigarettes, alcohol, fuel, and procurement fraud to protect our economy and consumers."

The MTBPS also highlighted reforms to strengthen government efficiency and transparency:

Launch of the Procurement Payments Dashboard, providing public insight into government spending.

Identification of nearly 9,000 high-risk ghost worker cases in the public service.

Implementation of the Early Retirement Programme, expected to save R3.5 billion per year.

"Every rand spent must contribute effectively to growth and service delivery, we are committed to fiscal discipline and eliminating waste in government," Godongwana said.

-Global engagement and African leadership

Godongwana underscored South Africa’s success in its G20 presidency, using the platform to place Africa’s growth and development concerns on the global agenda.

"Our presidency has provided lessons in infrastructure financing that we will now apply to accelerate development at home and across the region."

He added that the MTBPS signals the country's commitment to growth, fiscal stability, structural reform, and public-sector efficiency. By leveraging infrastructure, private investment, and sound macroeconomic management, the government aims to create jobs, reduce poverty, and enhance service delivery, while positioning the country as an attractive destination for global investment.

"South Africa is choosing growth, stability, and reform, we will use our collective efforts to increase the pace and scale of tackling unemployment and building a stronger economy," Godongwana said.

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