CAPE TOWN, Feb 25 - In the annual budget released on Wednesday, South Africa's National Treasury said it will put forward a "principles-led" fiscal anchor later this year, opting for a framework based on guiding principles rather than a specific numerical target. Details of the proposal will be shaped by consultations and are expected to be unveiled at the mid-term budget, which the Treasury noted is normally presented in October or November.
The Treasury framed the move as part of a broader push to restore the condition of public finances and to bolster investor confidence in Africa's largest economy. Officials described the measure as a way to maintain fiscal discipline without resorting to steep spending cuts or higher taxes - a point reflected in the budget language that the fiscal anchor would "maintain the gains of fiscal consolidation without resorting to painful spending cuts or tax increases".
The budget documents reiterate the Treasury's ongoing mission to rein in the rapid rise in the country's debt burden while implementing reforms intended to lift potential growth. The government's figures show that gross government debt has surged, from 23.6% of gross domestic product in the 2008/09 fiscal year to a projected 78.9% in the current year.
Growth has shown signs of recovery since last year, but the Treasury's estimates remain modest. The budget projects real GDP growth of 1.4% in 2025 and 1.6% in 2026, levels the Treasury indicated are insufficient to meaningfully reduce one of the world's highest unemployment rates.
On the fiscal balance, the Treasury now expects a consolidated budget deficit of 4.0% of GDP for the fiscal year that begins on April 1, up from its prior forecast of 3.8% of GDP. At the same time, the department sees the gross debt-to-GDP ratio easing to 77.3% in 2026/27.
The budget also included higher revenue estimates for the current fiscal year. The Treasury attributed those upward revisions to steady economic growth together with increases in commodity prices - factors that provided a stronger revenue backdrop than earlier anticipated.
By proposing a principles-led anchor, the Treasury is signaling a preference for a formal medium- to long-term framework to guide spending, borrowing, and revenue decisions - without committing to a legislated numeric ceiling at this stage. The precise content of that framework will be determined through consultation and set out at the mid-term budget later in the year.
Context and next steps
The forthcoming mid-term budget will present the Treasury's detailed proposal and the results of consultations. Observers will be watching how the principles-led approach is defined and whether it will be translated into enforceable targets or remain a guiding doctrine to shape policy decisions.