South Africa’s National Treasury says the country remains on course to meet its fiscal targets despite economic risks linked to the Iran conflict. Treasury Director-General Duncan Pieterse highlighted several factors supporting this outlook, including a third consecutive primary budget surplus of 1.1% of GDP for the fiscal year ending in March, exceeding the government’s forecast of 0.9%. The temporary fuel levy relief measure introduced to cushion the impact of surging fuel prices would ordinarily have weighed on government finances; however, it was designed to be fiscally neutral and will be funded by the previous year’s surplus. Pieterse also pointed to economic buffers such as a balanced current account, a resilient rand, and lower bond yields before the conflict began. Meanwhile, public spending is protected from inflationary pressures by an existing wage agreement that runs through 2027/28. Debt levels are also expected to decline after peaking in 2025/26, while improved finances at state-owned enterprises, particularly Eskom, have reduced the likelihood of future government bailouts.
Reuters
