Government debt is expected to stabilize for the first time since 2008.
Enoch Godongwana, Minister of Finance, said on Wednesday, while tabling the Mid Term Budget Speech, in 2025/26, debt is at 77.9 per cent of GDP.
This year, revenue will exceed the budget estimates by R19.3 billion. Meanwhile, debt-service costs will be lower by R4.8 billion.
The primary budget surplus of R68.5 billion or 0.9 per cent of GDP, will also be achieved this year. This is expected to grow to R224 billion by 2028/29.
The overall budget deficit will narrow to 2% in 2028/2029, from a current 4.5% of GDP in the current financial year.In addition, Godongwana announced a new inflation target of 3% with a 1% point tolerance band.
This new target replaces the previous target range of between 3 and 6%, to be implemented over the next two years.
“Our strategy for faster growth and healthier finances continues to be anchored on four pillars -maintaining macroeconomic stability, implementing structural reforms, building state capability and supporting growth-enhancing infrastructure” said Godongwana.
Investment will go towards modernising and growing the passenger rail system, preparing non-revenue water and reuse projects across municipalities, electricity transmission and renewables.
It will also go towards the Budget Facility for Infrastructure, disaster relief to fix schools, pipelines, clinics and substations damaged between last year and this year by floods in KwaZulu Natal, Mpumalanga, and the Eastern Cape.
A new infrastructure bond will be launched soon to raise a minimum of R15 billion.
A new Infrastructure Finance and Implementation Support Agency will also be operational by March 2026.
Picture: Supplied