The International Monetary Fund’s Executive Board completed its 2025 Article IV consultation with South Africa, judging that the economy has remained resilient despite repeated shocks but that entrenched structural constraints and rising public debt continue to weigh on potential growth and employment. The Board’s baseline envisages a gradual recovery, with real GDP growth estimated at 1.3 percent in 2025 and projected at 1.4 percent in 2026, while inflation is expected to converge to the new 3 percent target by end-2027 amid downside risks from global fragmentation, trade tensions and domestic reform fatigue. Directors called for well-coordinated policies to safeguard fiscal sustainability, secure low and stable inflation and preserve financial stability. On fiscal policy, they emphasised credible, growth-friendly and socially acceptable consolidation to stabilise and reduce debt while protecting priority spending, including through reprioritising and improving the efficiency and equity of public expenditure, continued domestic revenue mobilisation, and consideration of a fiscal rule anchored in a prudent debt ceiling. On monetary policy, they welcomed the shift to a lower 3 percent inflation target with a narrower band and recommended a flexible, data-driven approach supported by careful communication and gradual implementation. The assessment also highlighted ongoing financial stability reforms, including bank-resolution and safety-net measures and steps to strengthen the AML/CFT framework that enabled South Africa’s exit from the Financial Action Task Force grey list, alongside continued monitoring of non-performing loan risks and the sovereign–financial sector nexus and stronger supervision of banks and non-bank financial institutions. Structural reform priorities cited included resolute implementation of electricity and logistics reforms to remove key growth bottlenecks, complemented by measures to improve the business environment, governance and anti-corruption efforts, labour market flexibility, spatial inclusion and trade diversification.
International Monetary Fund 2026-02-11
International Monetary Fund concludes South Africa Article IV consultation and urges growth-friendly fiscal consolidation under a 3 percent inflation target
The IMF's Executive Board concluded its 2025 Article IV consultation with South Africa, noting resilience despite structural constraints and rising public debt, with GDP growth projected at 1.3% in 2025 and 1.4% in 2026. The Board emphasized coordinated policies for fiscal sustainability, inflation control, and financial stability, highlighting fiscal consolidation, a new 3% inflation target, financial stability reforms, and structural reforms in electricity, logistics, and governance.