Finance Minister Enoch Godongwana stated in this year’s Budget Speech that the nation is finally seeing a shift after a decade of financial struggles, with debt now stabilizing for the first time in 17 years. Addressing Parliament, the minister said that South Africa is beginning to turn the corner. Over the past decade, the country has been battered by state capture, credit downgrades, the Covid-19 pandemic, and its grey listing by the Financial Action Task Force (FATF) in 2023. “Faced with this crisis, we chose not to be defined by it. Instead, we turned it into a catalyst for change,” said Godongwana. “We committed to a clear reform agenda and a disciplined fiscal strategy built on three principles: stabilizing debt, investing in infrastructure, and spending better.”
He said that South Africa is now starting to see results, with debt set to stabilise for the first time in 17 years. Debt is now expected to fall in the coming years. The minister said that the budget deficit has narrowed significantly, and debt-service costs are also falling. There have been several key improvements, according to the Minister:
- South Africa has been removed from the FATF grey list.
- It secured our first credit rating upgrade in 16 years.
- Borrowing costs have eased, creating space for growth and development.
The consolidated budget deficit has narrowed to 4.5 per cent of GDP for 2025/26, an improvement from 4.8 per cent that we estimated in the 2025 Budget. The deficit falls to 4% in 2026/27 and 3.1% the year after. He noted that gross debt stabilises as a share of GDP in 2025/26, at 78.9%.
South Africans can now breathe a sigh of relief at the lowering of the debt rate. If the current ruling coalition has the right intentions, it can channel new economic growth into increased national revenue and job creation. Businesses must be encouraged to take advantage of the overall growth of the economy and the decrease in debt to expand their output. This opportunity could go a long way toward alleviating poverty to a certain extent.
- This comes after the long struggle to be removed from junk status, a legacy of the era of President Jacob Zuma. (The attempt has been successful.)
- The credit upgrade must be leveraged to attract the interest of wealthy investors, demonstrating that South Africa has learned from its previous mistakes.
- The creation of space for growth and development must be used to lay the groundwork for combating poverty and advancing education, thereby promoting basic human rights.
For overall growth and Gross Domestic Product (GDP), the Treasury, the Department of Trade and Industry, and other government departments should focus on promoting trade with neighbouring countries and boosting manufacturing output. Industrialization, in terms of technological progress and development, cannot happen without encouraging entrepreneurial skills. The stabilization of debt is only the beginning, depending on how Pretoria plans to harness the rising economic growth rate of two percent to its advantage.
Achieving growth rates akin to those of 2022 could provide significant relief to South Africa’s notoriously high unemployment rate, which currently hovers above 31%. Finance Minister Enoch Godongwana underscored at a recent National Budget Review presentation that the outlook for domestic growth is on the rise, bolstered by a stabilising global economy amidst a backdrop of ongoing geopolitical tensions that have been reshaping trade policies and supply chains worldwide. “We project real economic growth of 1.6% in 2026, an improvement from the 1.4% estimated in 2025,” Godongwana declared. He attributed this optimistic trajectory to the strengthening of economic performance from the latter half of 2025, adding that over the medium term, average growth is anticipated to settle around 1.8% before reaching the 2% mark by 2028, Business Report reported.
South Africa can become a major economic hub for all the regions to which it is connected, including southern Africa. Pretoria must look to the example of Botswana in alleviating poverty across all spheres of South African society. President Cyril Ramaphosa and the Government of National Unity (GNU) must attract investors to the right corporations, businesses, and economic sectors to grow markets and stimulate job creation.
South Africa must remain vigilant regarding geopolitical conflicts such as Russia’s war in Ukraine and the tensions in the Pacific between China and the United States (US). A key matter of concern within the country is investment in infrastructure and the cultivation of a culture of transparency and accountability. Greed can no longer be allowed to determine the direction of the economy.
South Africa must look to Africa for economic integration and assimilation into a common market and customs union. Only then can the nation secure its own prosperity.
Article written by:
Yacoob Cassim
Journalist at Radio Al Ansaar
