South Africa’s (SA) economy is showing continued signs of improvement as government projects an upward revision in economic growth from 1.4% in 2025, to 1.6% this year.
National Treasury notes that the improved economic outlook and public finances have been supported by household consumption on the back of lower inflation and interest rates, as well as the implementation of structural reforms.
Government says debt is now expected to peak at 78.9% of Gross Domestic Product (GDP), a percent higher compared to last year’s projection.
The government has proposed a principle based fiscal anchor which will be detailed in the midterm budget policy statement later this year.
It argues that while the primary budget surplus has become an acceptable way of anchoring fiscal expectations, an official anchor will be legally binding and incumbent on every incoming government administration.
The National Treasury argues that the upward revision to the peak of debt to 78.9% comes as a result of increased borrowing this year amid favourable market conditions and the nominal GDP effects of the lower inflation target.
SA citizens can breathe a sigh of relief following government’s decision to withdraw last year’s proposed 20-billion-rand tax increase.
Instead, taxpayer can expect some relief as personal income tax brackets and medical tax credits will be fully adjusted for inflation for the first time in two years.
–SABC–
