2025 Medium Term Budget Policy Statement (MTBPS) Speech by Minister Enoch Godongwana.

Parliament, 12 November 2025 — Finance Minister Enoch Godongwana presented the 2025 Medium Term Budget Policy Statement (MTBPS) in Parliament, outlining government’s fiscal strategy, economic outlook, and key reforms under the theme of growth, stability, and reform.

Addressing the Speaker of the National Assembly, Thoko Didiza, Deputy Speaker Annelie Lotriet, the Chairperson of the National Council of Provinces Refilwe Mtshweni-Tsipane, President Cyril Ramaphosa, and members of Parliament, Godongwana noted that South Africa, like many other nations, faces “intensifying global competition and mounting economic and political divisions.”

He said South Africa had recently been “falsely accused of genocide against its white community” and faced threats of punitive sanctions based on falsehoods. The minister expressed appreciation to communities in South Africa and abroad that “rejected the false narratives and the fear, hate and disinformation they represent,” commending those who chose to defend solidarity and equality.

Godongwana further thanked members of the Afrikaner community who publicly distanced themselves from the false claims, describing it as a reminder of South Africa’s collective responsibility “to forge prosperity grounded in truth, justice, and mutual respect.”

He then tabled before Parliament the following documents:

Division of Revenue Amendment Bill
Adjustments Appropriation Bill
Taxation Laws Amendment Bill
Tax Administration Laws Amendment Bill
The Medium Term Budget Policy Statement

The minister said South Africa had reason to be optimistic about its future, rooted in progress toward promises to grow the economy faster, strengthen public finances, and improve life for all.

He said that two years ago, government committed to stabilising public debt within the current year and then reducing it — a goal that remains on track despite a challenging environment of persistently low economic growth.

Godongwana confirmed that South Africa had successfully exited the Financial Action Task Force (FATF) grey list within two and a half years, following strong collaboration between government departments, law enforcement agencies, and the private sector. He cautioned, however, that the country must remain vigilant as FATF’s next mutual evaluation begins in the first half of 2026.

He said that as the first African chair of the G20, South Africa had placed Africa firmly on the global agenda, successfully concluding meetings of G20 finance ministers and central bank governors to secure critical consensus for continental development.

While recognising these achievements, Godongwana said the nation’s most urgent challenge remains “accelerating economic growth to create jobs and reduce poverty at the scale required.”

He noted that lessons drawn from the 2025 budget process have guided a broader effort to build consensus on achieving faster growth and leveraging public finances to attract the investment needed to create jobs and improve life for all.

Economic Outlook

Turning to the economic outlook, Finance Minister Enoch Godongwana said South Africa’s prospects are shaped by both domestic and global developments.

He noted that global growth is estimated to slow slightly to 3.2 per cent in 2025, amid continued trade tensions, geopolitical uncertainty, and supply chain disruptions.

While the shocks from unilateral tariffs imposed by the United States had not materialised as severely as expected, Godongwana warned that their delayed effects, coupled with rising protectionism, posed future risks to global productivity and price stability.

He said global equity markets have surged, driven by AI-related stocks and central bank rate cuts, but cautioned that such rallies carry the risk of sudden reversals.

Given this uncertainty, the minister said South Africa must leverage the immense opportunities presented by the sub-Saharan region. He emphasised that progress continues in implementing the Africa Continental Free Trade Agreement, which aims to strengthen multilateralism and regional cooperation.

Under South Africa’s presidency of the G20, significant strides had been made to strengthen macroeconomic fundamentals in debtor countries — many of them African — to build a more prosperous region and continent to support faster trade.

Domestically, Godongwana announced that real GDP growth is forecast at 1.2 per cent for 2025, more than double the growth recorded in 2024. He said the outlook strengthens moderately over the medium term, with growth expected to average 1.8 per cent between 2026 and 2028.

Structural reforms, particularly in energy and logistics, will be key to lifting the country’s rate of growth closer to developmental needs, the minister said.

He outlined government’s four-pillar strategy for faster growth and healthier public finances:

Maintaining macroeconomic stability.
Implementing structural reforms.
Building state capability.
Supporting growth-enhancing infrastructure.

Maintaining Macroeconomic Stability

Godongwana said faster economic growth depends on effective macroeconomic management, explaining that fiscal and monetary policies — the twin pillars of economic governance — must work together to lower inflation and borrowing costs for households and firms while keeping debt servicing affordable.

He revealed that over the past year, National Treasury and the South African Reserve Bank jointly assessed the impact of a lower target on the economy and fiscal framework.

“This work has now been concluded,” he said, “and recommends a revision to the target to strengthen the framework and enhance price stability by better anchoring inflation expectations and aligning South Africa to international best practice.”

The minister announced a new inflation target for South Africa of 3 per cent, with a 1 percentage point tolerance band, replacing the previous range of between 3 and 6 per cent. The decision follows agreement between the Reserve Bank Governor and the Minister’s consultations with the President and Cabinet.

He said the 1 percentage point band allows flexibility to accommodate any unexpected inflationary shocks while maintaining a flexible approach to inflation targeting.

“The Reserve Bank will pursue the target on a continuous basis and clearly communicate any deviations from the target,” Godongwana said. The new target will be implemented over the next two years.

Over time, he said, the lower target will decrease inflation expectations and inflation, creating room for lower interest rates, which will support household spending and business investment, boosting economic growth, and job creation.

He acknowledged that the short-term fiscal costs of a lower target include reduced nominal GDP and revenue growth, which will make achieving fiscal targets more challenging, but stressed that the long-term benefits far outweigh these costs.

“We remain committed to ensuring that our macroeconomic policies serve the best interests of all South Africans,” he said.

Fiscal Outlook

Finance Minister Enoch Godongwana said government’s fiscal strategy aims to achieve three main goals:

To anchor fiscal policy by stabilising debt and growing the primary budget surplus;
To mobilise and direct more resources toward infrastructure investments; and
To improve efficiency and effectiveness of spending.

He said government is on track to restore fiscal sustainability, with public debt expected to stabilise in $2025/26$ at 77.9 per cent of GDP — the first time since the 2008 financial crisis that public debt will not grow as a percentage of GDP.

Godongwana said that since 2008, government spending had consistently exceeded revenue, driving up debt and debt-service costs, which in turn crowded out critical services and exerted pressure on lending rates across the economy.

“But we are now turning this around,” he said.

The minister reported that revenues will exceed budget estimates by R19.3 billion this year, while debt-service costs will be R4.8 billion lower than anticipated. Over the medium term, debt-service costs are projected to grow by 3.8 per cent annually, down significantly from the 7.4 per cent growth rate forecast at the time of the 2025 Budget.

He added that government will achieve a primary budget surplus of R68.5 billion, or 0.9 per cent of GDP, in the current year, rising to R224 billion by $2028/29$ .

The overall budget deficit will narrow from 4.5 per cent of GDP in $2025/26$ to 2.7 per cent by $2028/29$ .

To further ensure long-term fiscal sustainability, Godongwana said government is considering options for a formal fiscal anchor, exploring a “principles-led approach” that provides for clear parliamentary oversight, stronger reporting on fiscal risks, and transparency on distributional impacts.

He noted that consultations with stakeholders and experts are ongoing following the publication of a discussion paper on the matter earlier this year.

Revenue Adjustments

The minister said better-than-estimated tax revenue, of R19.7 billion, is the result of stronger household expenditure, which boosted value-added tax collections, alongside improvements in corporate and dividend tax receipts. Lower-than-expected VAT refunds also contributed to the improved outlook.

Godongwana said the higher revenue allows government to bring forward some once-off expenditure.

He reminded Parliament that, as indicated in the 2025 Budget, an additional R4 billion was allocated to the South African Revenue Service (SARS) to strengthen debt collection and increase annual revenue by between R20 billion and R50 billion.

Government will continue monitoring SARS’s revenue performance through the remainder of the fiscal year, and the assessment will determine whether the R20 billion in additional tax increases for the 2026 Budget, as earlier proposed, can be withdrawn. A final decision will be announced in the 2026 Budget.

Combating the Illicit Economy

Godongwana warned that illicit trade in goods such as cigarettes and alcohol continues to threaten the economy, endanger consumers, and deprive the fiscus of billions in revenue.

He said illicit markets in these sectors undermine legitimate businesses and public health, adding that each year, billions in taxes go uncollected — funds that could have closed the revenue gap and avoided tax increases entirely.

According to SARS, government has lost around R40 billion in excise revenue to the cigarette black market since 2020, with similar patterns in illicit alcohol and fuel.

The minister said government is clamping down on these activities. In the past six months, SARS suspended three licenses for non-compliant tobacco producers. The Financial Intelligence Centre has also provided intelligence reports to assist in investigating criminal syndicates, identifying illicit markets in tobacco, precious metals, fuel, and procurement fraud.

He stressed that customs officials must fulfil their duty to prevent criminals from dodging taxes and flooding local markets with dangerous products.

In-Year Adjustments

Godongwana said the improved revenue outlook allows for changes to spending estimates. For the current year, additional expenditure of R15.8 billion is proposed.

This includes R2 billion for the rebuilding of Parliament, R1 billion for the Independent Electoral Commission for the 2026 municipal elections, and funding for the National Dialogue and its carry-through costs announced in the May Budget.

These allocations come in addition to the extra funding provisions for Education and Health also announced in the May Budget.

Infrastructure and Public Investment

Finance Minister Enoch Godongwana reaffirmed President Cyril Ramaphosa’s position that infrastructure is the “flywheel” of South Africa’s economy, noting that government is shifting the composition of spending from consumption toward investment.

He said capital payments are now the fastest-growing expenditure item, projected to increase by 7.5 per cent over the medium-term.

Godongwana explained that public resources are being leveraged to mobilize private finance and expertise at scale, to strengthen service delivery, improve spending effectiveness, and drive higher economic growth.

He said that amendments to public-private partnership (PPP) regulations, which took effect on 1 June 2025, have unlocked potential across all spheres of government and streamlined approvals for smaller projects.

Three weeks before the speech, new guidelines on unsolicited bids and fiscal commitments and contingent liabilities were also issued and took immediate effect. These, he said, provide a clear and structured pathway for the private sector to submit project ideas to government, while creating a framework for reporting and managing fiscal commitments and contingent liabilities arising from PPP projects.

He added that municipal PPP regulations will be amended by 2026, leveraging lessons from the Renewable Energy IPP project to streamline planning and procurement.

The Department of Transport’s private-sector participation unit, Godongwana said, is reviving the passenger transport and logistics sector. Following strong interest from freight logistics requests for information, the unit will issue the first rail corridor request for proposal by December 2025, with others expected in early 2026.

The unit has also released requests for information for investment opportunities to modernise and expand the passenger rail system.

Meanwhile, the Water Partnerships Office is preparing non-revenue water and reuse projects across municipalities, creating a robust pipeline of opportunities for private co-investment.

The Budget Facility for Infrastructure (BFI) has also been reconfigured to run four bid windows annually, instead of one. Since the change, it has received 28 submissions, with nine projects accepted for detailed analysis.

Godongwana said R4.1 billion has been allocated for disaster relief to repair schools, pipelines, clinics, and substations damaged by floods in KwaZulu-Natal, Mpumalanga, and the Eastern Cape.

To fund BFI projects, a new infrastructure bond will soon be launched to raise a minimum of R15 billion, forming part of efforts to introduce dedicated financing instruments that mobilise cheaper capital for infrastructure development.

Government will also contribute R2 billion to capitalize the Credit Guarantee Vehicle. Initially, this vehicle will support electricity transmission expansion, enabling private investment in high-voltage transmission lines, which directly contributes to energy security and decarbonisation.

“This heralds a new era in PPPs,” Godongwana said, describing it as a key and innovative part of infrastructure reforms developed with international partners to de-risk private investment without state guarantees.

He confirmed that the new Infrastructure Finance and Implementation Support Agency will be operational by March 2026, providing project preparation support and centralising infrastructure finance functions to systematically crowd-in private capital and promote alternative delivery mechanisms.

Godongwana acknowledged that municipalities remain on the frontline of providing essential services but face serious capacity constraints. To address this, government is piloting a utility reform programme in several municipalities in Mpumalanga to stabilise and professionalise water and electricity businesses.

He said accredited indirect delivery partners, such as the Development Bank of Southern Africa (DBSA) and the Municipal Infrastructure Support Agent (MISA), will provide the infrastructure while building municipal capability to do this on their own.

“These interventions will help ensure that our goal of public sector investment in infrastructure exceeds the R1 trillion mark over the next three years,” the minister said.

Implementing Structural Reforms

The Minister noted that steady progress is being made on structural reforms, a key pillar to the strategy of growing the economy. These reforms are crucial to dismantling the binding constraints and ensuring every lever of the state works efficiently and effectively towards a stable, growing, competitive, and inclusive economy.

Through Operation Vulindlela, now in Phase 2 since it started in 2021, tangible momentum is being built across energy, logistics, water, local government, spatial integration, and digital transformation.

Energy: Loadshedding has come down significantly. The National Transmission Company has now applied for its Market Operator license. More than 2,220 megawatts of solar, wind and battery projects are in development, with 720 megawatts at advanced stages. Eskom has added 800 megawatts from Kusile Unit 6 and is showing signs of operational and financial improvements.
Logistics: Reforms are gaining speed. Eleven private train operators now have slots on 41 routes across six corridors. Port efficiency is improving, with vessel waiting times down 75 per cent, while container handling is faster. Durban Pier 2 is welcoming private operators, expected to unlock R200 billion in investment over the next five years.
Water Security: The Water Services Amendment Bill clarifies institutional roles, while the National Water Resources Infrastructure Agency launches in April 2026. The Africa Water Investment Summit secured US$12 billion in commitments for 80 projects, including 36 in South Africa.
Visas: The visa system has been modernised by clearing 300,000 backlogs to attract skills, investment, and tourism.

Building State Capability

The Minister turned his attention to the pillar of building state capability, from local to national.

Municipal Reform: The Municipal Infrastructure Grant (MIG) is being reformed. Where municipalities show persistent failure, delivery will shift to an indirect model through agencies like MISA and DBSA, coupled with time-bound capability plans. Over the 2026 Budget, R19.3 billion has been reallocated towards metro trading services reform.
Procurement Transparency: Government’s first Procurement Payments Dashboard is launched today, using data from the Basic Accounting System (BAS) and available on the National Treasury eTender website. This enables analysis of procurement expenditure and suppliers, helping citizens and civil society hold departments accountable.
Payroll Integrity (Ghost Workers): National Treasury is working closely with the Department of Public Service Administration and Home Affairs. They have already uncovered close to 9,000 high-risk ghost worker cases that have been flagged for further verification.
Early Retirement Programme: This program provides financial incentives for employees to exit the public service from October 2025. These interventions are expected to deliver long-term average savings of around R3.5 billion per year.

Medium-Term Revenue and Expenditure

Finance Minister Enoch Godongwana presented an overall picture of South Africa’s revenue and expenditure outlook over the medium term.

Revenue Projection: Gross revenues are projected to fall short of 2025 Budget estimates by around R15.7 billion over the next two years.
Expenditure Growth: Consolidated government spending will increase from R2.6 trillion this year to R2.9 trillion in $2028/29$ .
Social Commitment: Approximately 61 per cent of consolidated non-interest spending over the next three years continues to fund the basket of government-provided services and benefits that reduce the cost of living for citizens, supporting low-income and vulnerable households.

Targeted and Responsible Savings (TARS)

The TARS initiative is systematically identifying duplication, eliminating waste, and reorganizing programmes to deliver better value for money.

Immediate Savings: Government is implementing medium-term savings of R6.7 billion by closing or scaling down low-priority and underperforming programmes immediately.
Source of Savings: More than half of this involves identifying people who are double-dipping and defrauding the social grants system.
Grant Reform: Government is also scaling down the Public Transport Network Grant, as it has failed to meet its objective.
PRASA Progress: Commuter rail is the backbone of public transport. PRASA moved 11.8 million passengers in $2022/23$ to 116 million last year.

Division of Revenue

Provincial/Municipal Share: The share of nationally raised revenue for provinces and municipalities will, respectively, increase to 42.4 and 9.7 per cent over the medium term.
Purpose: The allocations cater for changes in population growth and compensate municipalities for increases in bulk service charges related to free basic services. They also ensure the placing of local government operating capacity on firm grounding.

Conclusion

The Minister concluded that the presentation of the Medium-Term Budget Policy Statement sends a clear message: South Africa is choosing growth, stability, and reform.

G20 Presidency

South Africa’s presidency of the G20 comes to an end soon.

Key Achievements: The Africa Engagement Framework, which prioritises fiscal, institutional and cost of capital concerns, is among the achievements to be proud of. The Ministerial Declaration on Debt Sustainability is another landmark achievement.

The Minister thanked the President and Deputy President, the Deputy Ministers of Finance, the National Treasury team led by the Director-General, the Commissioner of SARS, and the Governor of the South African Reserve Bank, among others. He also expressed gratitude to the citizens of South Africa for their faith.

Read Full Document: 2025 MTBPS Speech _ 12112025