Star 2025-11-13

South African Reserve Bank defends lower inflation target as key to boosting real incomes and spending power The South African Reserve Bank (Sarb) Governor Lesetja Kganyago has defended the government’s decision to lower the inflation target, saying the move is aimed at protecting the value of money, enhancing consumer purchasing power, and improving fiscal efficiency. This comes as Finance Minister Enoch Godongwana on Wednesday officially reduced South Africa's inflation target to 3% with a tolerance band of 1 percentage point on either side over the next two years in a bid to ease the elevated cost of living on consumers. This new target immediately replaces the previous target range of between 3 and 6% with a midpoint of 4.5%, which has been implemented since 2000. Over the past year, the…

The National Treasury has revised South Africa’s economic growth forecast for 2025 downward, citing weaker global and domestic conditions, but remains optimistic that ongoing structural reforms in energy and logistics will help the economy gain traction in the coming years. In its the Medium-Term Budget Policy Statement (MTBPS) tabled on Wednesday, Treasury said it now expects real gross domestic product (GDP) growth of 1.2% in 2025, down from 1.4% projected in February. The revision follows weaker-than-expected performance in the first half of the year, subdued consumer and business confidence, and a fragile global recovery. Despite the downgrade, the 2025 forecast still marks a recovery from the 0.5% growth recorded in 2024, with Treasury projecting an improvement to 1.8% on average between 2026 and 2028 as reform momentum builds and infrastructure…

Finance Minister Enoch Godongwana has assured the markets that South Africa is on track to restore fiscal sustainability, stabilise public debt, and improve spending efficiency, even in a challenging low-growth environment. Delivering the 2025 Medium-Term Budget Policy Statement (MTBPS) on Wednesday, Godongwana said government remains committed to meeting the fiscal targets set out in the February Budget. This is despite the public debt now expected to peak at 77.9% of GDP in the current fiscal year, slightly higher than the 77.4% estimated in May. “I am pleased to inform the House and the country that we are on track to restore fiscal sustainability. Government debt will stabilise in 2025/26, at 77.9% of GDP,” Godongwana said. “This is the first time since the 2008 financial crisis that public debt will not…

Although Eskom reported an annual profit in 2024/25, for the first time in a decade, the improved financial performance remains at risk, partly due to escalating municipal debt arrears. In 2023/24, government initiated a debt-relief arrangement to strengthen Eskom's balance sheet, enabling it to restructure and undertake essential investments and maintenance required to ensure a stable electricity supply. As reported in the 2025 Budget Review, partly in response to Eskom's improved performance, the National Treasury revised the package, extending the support period to 2028/29 and reducing the total relief provided from R254 billion to R230bn. Legislation introduced in September 2025 provided for these measures. The fiscal risk associated with Eskom has eased, although continued implementation of operational and financial reforms is critical to sustain progress and ensure lasting stability. This…

Although Transnet has not yet met its own targets, the Medium- Term Budget Policy Statement (MTBPS) notes that progress has been made. In particular, the Treasury said that Transnet's freight rail volumes increased in 2024/25 and port volumes have stabilised. “Reforms in freight logistics focus on upgrading poorly maintained infrastructure and introducing private-sector participation in rail and ports. A rail infrastructure manager was established as a separate division of Transnet in April 2025 and has opened slots on the freight rail network to 11 private rail companies,” the MTBPS said. Transnet is addressing a financial and operational decline as rail volumes have declined from 226.3 million tonnes in 2017/18 to 151.7 million tonnes in 2023/24 due to derailments, inefficiency and infrastructure damage. In 2023/24, Transnet reported a net loss of…

The South African Post Office (Sapo) was not mentioned in the Medium-Term Budget Policy Statement (MTBPS), so I had to ask the Finance Minister Enoch Godongwana in his media briefing why that was so. He answered that this was because the Treasury and the Department of Communications and Digital Technologies had not yet finalised what the Post Office of the Future would look like in the digital age. Sapo was placed in business rescue on July 10, 2023. In 2023/24, Sapo reduced costs and met some operational targets, yet it remains financially stressed due to high net losses and low revenue. Sapo used the R2.4 billion allocated in 2022/23 to implement a business rescue plan. As part of this plan, it closed 354 branches and retained 657 branches. The Treasury…