IMF Says SA Resilient but Warns Debt Still Rising

South Africa’s economy has weathered repeated global shocks but remains constrained by rising public debt and weak medium-term growth, according to the International Monetary Fund (IMF).

In its latest Country Report on South Africa, the IMF said the economy proved resilient in 2025 despite heightened global uncertainty and trade tensions, citing “independent institutions” and a “strong monetary policy framework” as key buffers. Real GDP growth is estimated at 1.3% in 2025, while inflation averaged 3.2%. Growth is projected at 1.4% in 2026 and 1.8% over the medium term.

However, public debt reached 77% of GDP by the end of March 2025 and is expected to continue rising. The Fund warned that debt risks are “tilted to the downside,” pointing to global uncertainty and potential reform fatigue at home.

The IMF welcomed the authorities’ shift to a lower 3% inflation target, saying the move could strengthen credibility if implemented gradually and communicated clearly. It also urged credible, growth-friendly fiscal consolidation, improved spending efficiency, and stronger revenue mobilisation. A “fiscal rule anchored in a prudent debt ceiling” could bolster confidence, the report noted.

The Fund highlighted progress in financial sector supervision and reforms that helped secure South Africa’s exit from the Financial Action Task Force grey list. But it stressed that broader structural reforms in electricity, logistics, governance, and the business environment remain essential to unlock higher growth.

While the IMF’s tone is measured rather than alarmist, the message is clear. South Africa has stabilised, but without faster reform and firmer fiscal control, growth will remain modest and debt pressures will intensify.