Minister of Finance Enoch Godongwana briefs members of the media before tabling the Medium-Term Budget Policy Statement in Parliament, Cape Town, on 12 November 2025. (Photo: Jairus Mmutle / GCIS) 
Markets reacted favourably to Finance Minister Enoch Godongwana’s Medium-Term Budget Policy Statement (MTBPS) on Wednesday, 12 November 2025, with the rand hitting its best levels in 2025 while government bond yields dipped.
The rand gained to 17.05/dollar within an hour after the minister started speaking from 17.14/dollar just before he said “Madam Speaker” — the first indication that markets viewed the statement favourably.
The main factor driving this wave of positive investor sentiment was the unveiling of a 3% inflation target with a 1 percentage point tolerance band — effectively moving it to a band of 2% to 4%, from 3% to 6%.
Read more: SA shifts inflation target in bold move towards economic stability and growth
“We (South Africa) have normalised ourselves with our emerging market peers and reduced the potential for inflation adjustment pressures,” George Glynos, head of research at ETM Analytics, told Daily Maverick.
But the country’s slow-growth trajectory remains a sobering reminder that the Treasury has its work cut out for it to meet its debt stabilisation and reduction targets.
Gross domestic product (GDP) is seen growing only 1.2% in 2025, more than double the sluggish pace of last year, and growth is seen averaging 1.8% from 2026 to 2028.
The Treasury now projects a slightly narrower budget deficit of 4.7% of GDP in 2025/26 and expects this to be reduced to 2.9% of GDP by 2028/29. And it forecast government debt to stabilise in 2025/26 at 77.9% of GDP, up slightly from 77.4% previously.
“My only criticism is that Godongwana seemed very pleased with our growth numbers, which are not enough to make real changes. While this is not the speech for it, I am still waiting for the roadmap for the private sector to grow as quickly as it can,” Shawn Duthie, an analyst at Control Risks, told Daily Maverick.
This makes the debt targets tough as slower-than-forecast growth will raise the level of debt as a percentage of GDP.
“South Africa’s sluggish economic growth outlook remains a concern and an obstacle to stabilising debt, given the country’s elevated social spending needs,” said Jee-A van der Linde, a senior economist at Oxford Economics Africa.
“While the finance minister may claim that South Africa is on track to restore fiscal sustainability, investors and ratings agencies may want to see further evidence of sustained economic improvement, as well as signs of more policy predictability as they look towards next year’s budget.”
South Africa’s prospects for credit ratings upgrades are also constrained by the poor economic growth outlook.
“The preservation of the debt-GDP peak this year should be positive for South Africa’s sovereign credit ratings insofar as it confirms the government’s commitment to fiscal consolidation,” said Dr Elna Moolman, Standard Bank group head of South Africa Macroeconomic Research.
“That said, a few factors such as a further increase of the forecast debt-GDP trajectory, still weak economic growth trajectory and further discretionary increases in fiscal spending may underpin their continued caution.” DM