The International Commodity Summit 2025 has raised concern with regards to South Africa’s 2025’s Budget Review, and notes that the country needs to employ a growth strategy in order to promote economic growth. This year’s budget saw a mild near-term fiscal slippage with a weakening in government’s debt to GDP projections and fiscal deficits, but then a continuation of previous projections’ moves to fiscal consolidation.
Within the first quarter of 2025, South Africa has been hit with a lot of blows this year with the cutting of US foreign aid by Donald Trump, and the US withdrawal from the Just Energy Transition Partnership (JETP) with the UK, France, Germany and the EU.The gross debt of the government is consequently now projected to stabilise at 76.2% of GDP in 2025/26.
Previously the projection was estimated to peak at 75.5% in 2025/26 in the MTBPS last year. The budget deficit for 2025/26 is now estimated at -4.6% of GDP, widening from the prior estimate of – 4.3 % of GDP, and expected to reach -3.5% by 2027/28. VAT rose by 0.5%, with no fiscal drag adjustment.
The upwards revision of National Treasury’s economic growth forecasts to 1.9% y/y from 1.7% y/y for 2025, which is above the consensus forecast (Bloomberg, Reuters), and remains around 1.8% y/y thereafter.
Vice President of Hibarri, Cherrylee Samson states that in order for South Africa to avoid a future deficit, the country should focus on increasing economic growth, reducing spending, and an improvement of revenue collection.
“The truth is that South Africa needs to address structural issues like corruption and inefficient state-owned enterprises in order to avoid this similar pitfall’, said Samson.
The Centre for Development and Enterprise (CDE) executive director, Ann Bernstein discussed real solutions addressing South Africa’s budget crisis ahead of the 2025 budget speech on Radio 702.
“The proposed 5.5% public wage bill was raised to 3.5% with a Consumer Price Index (CPI-linked) adjustment over two years, suggesting we could save one billion in rands, instead of relying on tax hikes,” Bernstein said.
With GDP in 2024 at a paltry 0,6 percent, a R190 billion hole in the three-year Medium Term Expenditure Framework and a debt to GDP ratio rising above 75 per cent, South Africa’s challenges are daunting.
Wynand Gouws, wealth manager at Gradidge-Mahura Investments, says the Budget Speech contained no major surprises but confirms that the average taxpayer will feel the financial squeeze.
“The cost-of-living challenge that South Africans have faced will be compounded by additional taxes, be it directly or indirectly,” said Gouws.
Lara Warburton, managing director of Integral Wealth Management, describes the Minister of Finance as “walking a tightrope at a very difficult time for South Africa.”
“He has the unenviable goal of trying to reduce our long-term debt burden, which is costing the country 22 cents in every rand SARS earns, while accommodating disappointing GDP growth of 1.8% and above-inflation public sector wage increases in a bloated public sector”, said Warburton.
Argentina’s Minister of Deregulation and State Transformation, Federico Sturzenegger, states that a prior model introduced in his country drove transformation, and that South Africa is no different.
“The reforms have a dimension that goes deeper than the reforms themselves… an economic overhaul of the economic power structure in Argentina – a challenge to the political establishment”, said Sturzenegger.
South Africa in essence needs to re-evaluate its priorities in terms of politics, and economics, which may result in a positive change in the country’s current economic trajectory.
The International Commodity Summit 2025 (ICS2025) reiterates that boosting the economy through investment and trade remains their vision with the inaugural summit to be hosted at the CTICC in July.
“The summit aims to produce higher exports which inevitably will result in a greater global and regional integration that can bring substantial gains for South Africa, and boost growth and employment”, said Samson.
Research shows that South Africa has underperformed in terms of exports relative to its peers over the past two decades. The truth is that the country’s traditional drivers of growth, namely household and government consumption, continue to be hampered by a weak labour market and declining fiscal space. This constrains the government’s ability to boost aggregate domestic demand.
Samson notes that the external sector can be leveraged to support higher and sustainable growth in South Africa.
“Greater outward orientation can help increase competition in domestic markets and support the adoption of productivity-enhancing technologies through imports – this will possibly enable increased economies of scale and specialization that can contribute to job creation, inclusive growth, and poverty reduction”, said Samson.
For further information on The International Commodity Summit 2025, including registration details, sponsorship opportunities, and the full agenda, please visit [https://internationalcommoditysummit.com/].
Grecia Mgolombane, Journalist
About the International Commodity Summit 2025
The International Commodity Summit 2025 is a premier event that convenes top economic experts, government officials, and industry leaders from across the globe. This year’s summit specifically addresses the challenges faced due to shifts in U.S. economic policies, with an emphasis on mitigating the negative effects on nations such as South Africa. Participants will engage in rich dialogue, share successful strategies, and foster international cooperation aimed at rebuilding economic stability. For more information on the International Commodity Summit 2025, please visit (http://www.internationalcommoditysummit.com)