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South Africa Sets 3% Inflation Target and R6.7 Billion Savings in Medium-Term Budget

Markets strengthened on the policy shift.

Overview

  • Treasury forecasts debt stabilisation in 2025/26 at about 77.9% of GDP, with growth projected at 1.2% in 2025 and an average of roughly 1.8% from 2026 to 2028.
  • The Targeted and Responsible Savings initiative identifies R6.7 billion in medium-term cuts by closing or scaling down low‑priority and underperforming programmes.
  • Data checks flagged 8,854 suspected ghost-worker cases, and an early‑retirement scheme funded with R5.5 billion aims to enable 15,000 exits and deliver longer‑term payroll savings.
  • Infrastructure delivery is being prioritised through a reconfigured Budget Facility for Infrastructure and a planned bond targeting at least R15 billion for selected projects.
  • Non‑interest spending maintains a strong social focus, with roughly 60% allocated to the social wage and the SRD grant extended to March 2027, as unions and some analysts argue the package lacks stronger job-creation measures.