Finance Minister Enoch Godongwana has declared that South Africa’s public debt will finally stop rising as a share of GDP, signalling what he called steady progress toward fiscal sustainability.

Delivering the 2025 Medium-Term Budget Policy Statement in Parliament today, the minister said: “Government debt will stabilise in 2025/26, at 77.9% of GDP.” He added: “This is the first time since the 2008 financial crisis that public debt will not grow as a percentage of GDP.”

After more than a decade of runaway spending, Godongwana said the fiscal balance had turned the corner: “This year, revenues will exceed the budget estimates by R19.3 billion. Meanwhile, debt-service costs will be lower by R4.8 billion.” He projected a primary budget surplus of 0.9% of GDP this year, growing to R224 billion by 2028.

Unveiling a major monetary-policy shift, the minister announced: “Today I announce a new inflation target for South Africa of 3% with a 1 percentage point tolerance band.” He said the decision followed agreement with Reserve Bank Governor Lesetja Kganyago and consultation with the President and Cabinet: “This new target immediately replaces the previous target range of between 3% and 6%, and will be implemented over the next two years.”

Godongwana added: “The lower target will decrease inflation expectations and inflation, creating room for lower interest rates. This supports household spending and business investment, boosting economic growth and job creation.”

Turning to growth prospects, he said: “Domestically, we forecast real GDP growth of 1.2% for 2025, more than double the economic growth in 2024.” Growth, he added, should average 1.8% between 2026 and 2028 as energy and logistics reforms take hold.

Energy reform, the minister noted, was showing tangible results: “Loadshedding has come down significantly.” He credited targeted interventions under Operation Vulindlela for: “transforming the sector” and building a competitive wholesale market.

Infrastructure spending will accelerate as the engine of recovery: “Capital payments are the fastest growing expenditure item at 7.5% over the medium-term,”Godongwana told MPs before announcing: “To raise the funding for these BFI projects, a new infrastructure bond will be launched soon to raise a minimum of R15 billion.” The bond would help mobilise cheaper financing for a planned R1 trillion public-sector investment drive.

To rein in waste and free resources for development, the minister said: “We are implementing medium-term savings of R6.7 billion by closing or scaling down low-priority and underperforming programmes immediately.” More than half of the savings, he added, would come from clamping down on social-grant fraud.

Godongwana also confirmed progress in purging ghost workers from the public service: “We have already uncovered close to 9 000 high-risk cases that have been flagged for further verification.” A data-driven audit and early-retirement programme are expected to save R3.5 billion a year and rejuvenate the civil service.

In his closing remarks, Godongwana summed up the tone of the statement in a single line: “South Africa is choosing growth, stability, and reform.” He said the medium-term plan: “represents our commitment to an open and transparent budget process” and invited stakeholders to: “contribute to the discussion of the nation’s priorities.”