What to Look Out for in This Year’s Medium-Term Budget Speech

South Africa is gearing up for the release of its much-anticipated Medium-Term Budget Policy Statement (MTBPS), with economists and analysts eager to hear Finance Minister Enoch Godongwana outline the government’s fiscal and reform priorities for the coming years. The minister is set to deliver the delayed update on 12 November 2025, following an unusually turbulent year in the country’s fiscal calendar.

Key Takeaways

• Fiscal discipline remains the central theme: Despite improved revenues from gold and platinum, South Africa’s fiscal position remains fragile. The National Treasury is expected to stick to a conservative spending path while emphasizing that growth alone cannot resolve the country’s debt challenges.
• Commodity gains mask structural weaknesses: The economy has benefited from higher commodity prices, but growth remains narrowly based on mining exports. Economists warn that productivity and infrastructure reforms are critical to achieving sustainable, broad-based growth.
• Reform momentum under scrutiny: With South Africa’s recent removal from the FATF grey list and continued progress under Operation Vulindlela, this year’s MTBPS will test whether government can maintain reform momentum and reassure investors of its commitment to fiscal consolidation.

Context and Background

According to Citadel Chief Economist Maarten Ackerman, the upcoming MTBPS will be presented in a vastly different political and economic environment than at the start of 2025. The initial National Budget, originally scheduled for February, was cancelled after a controversial proposal to raise value-added tax (VAT) by two percentage points drew widespread backlash.

Two revised versions were later presented, with the final iteration in May passed without the VAT increase. These disruptions delayed the MTBPS, traditionally released in October, to November.

When the February budget was first drafted, global uncertainty was high due to renewed trade tensions spurred by United States President Donald Trump’s confrontational trade policies. At the time, Treasury forecasts were cautiously optimistic, but the fiscal outlook was under pressure. The debt-to-gross domestic product (GDP) ratio was expected to peak near 80 percent, a figure that was used to justify the proposed VAT hike.

Global Shifts and Domestic Impacts

Since then, the global economic environment has shifted significantly. Fears of severe fallout from tariff increases have eased, and South Africa has benefited from unexpected global trends. Rising doubts about the long-term dominance of the US dollar have increased demand for gold, a key South African export, boosting the country’s foreign earnings.

Ackerman noted that recent US policy reversals, such as the rollback of electric vehicle subsidies, have also lifted platinum prices, providing further support for the mining sector. Local production constraints have tightened supply, adding to the rally.

These trends have pushed the Johannesburg Stock Exchange (JSE) to record highs and strengthened the rand. However, Ackerman cautioned that the improved fiscal picture remains driven by commodities rather than a true, broad-based recovery.

South Africa continues to grapple with sluggish productivity and rapid population growth, both of which cap potential growth at around 1 percent, too low to ensure fiscal sustainability. Still, better-than-expected GDP growth and higher mining revenues have helped lower bond yields, giving the Treasury some relief.

Outlook from Other Economists

Frank Blackmore, Lead Economist at KPMG, shares a similar but more cautious view. He expects Treasury to revise downward the May 2025 growth forecast of 1.4 percent for 2025 and 1.7 percent by 2027, given weaker global conditions. Slower growth, he warned, could worsen debt ratios and strain revenue collection.

Blackmore said weaker growth will force government to explore new revenue and spending measures, though the MTBPS will not include detailed tax or expenditure plans. Those specifics will come in next year’s National Budget.

Tip: Investors often read between the lines of the MTBPS for clues about future tax policy. Phrases like “revenue enhancement” or “fiscal adjustment” can signal upcoming tax changes or spending cuts.

Key Focus Areas

Blackmore expects fiscal consolidation to take centre stage, with emphasis on controlling expenditure and reducing the deficit. Updates on infrastructure investment and job creation initiatives are also anticipated, alongside progress reports on Operation Vulindlela.

The statement is likely to outline early indicators for next year’s National Budget, offering broad revenue and spending intentions while reinforcing the government’s commitment to prudent fiscal management.

Conclusion

The upcoming Medium-Term Budget Policy Statement will serve as both a progress report and a credibility test for South Africa’s fiscal strategy. While higher commodity prices and an improved global backdrop have offered short-term relief, the country’s structural weaknesses persist.

Investors, rating agencies, and citizens alike will look to Minister Godongwana’s address for evidence that temporary gains can be converted into lasting reform and growth. The tone and substance of the statement will play a decisive role in shaping market sentiment and determining whether South Africa can transition from fragile recovery to durable economic resilience.