Moneyweb columnist Izak Odendaal writes in a Moneyweb opinion piece, “Seeing the wood for the threes”, that South Africa could reach two out of three “threes” over the medium term: a 3% budget deficit and 3% inflation. The third, 3% real GDP growth, he calls the missing ingredient. The “three threes” is his framing, borrowed from a plan US Treasury Secretary Scott Bessent started with. It is not a target set out in the Medium-Term Budget Policy Statement (MTBPS).
What it means for business: Odendaal argues that lower inflation would let interest rates settle lower, which he says should help interest-rate-sensitive investments and consumer spending. He is also clear that growth is the weak link.
The deficit
According to Odendaal, the MTBPS shows the main budget deficit with a “three handle” for the first time in a decade this fiscal year, meaning a figure in the 3% range, not under 3%. Finance Minister Enoch Godongwana said the deficit is on track to narrow to 3.9% of GDP, down from 4% in February, as Daily Investor reported. Odendaal says the deficit is projected to fall below 3% by 2029.
A 3% deficit has long been a rule of thumb for fiscal sustainability, he writes, citing the 1992 Maastricht Treaty, which limits EU members to a 3% of GDP deficit. He says the rule has been ignored more than it has been observed, with France running a 5.4% deficit and the US close to 6%. South Africa’s path relies on a growing primary surplus, meaning non-interest spending held below tax revenues. Debt-service costs, which he says ballooned after years of borrowing at high interest rates, are expected to plateau at around 5% of GDP.
Odendaal says the debt-to-GDP ratio peaked in the previous fiscal year and is bending down, though the details are slightly worse than in February. He attributes this to the fuel price shock hitting the economy and to National Treasury directing much of the R54 billion revenue windfall towards infrastructure and the contingency reserve rather than faster debt reduction. He adds that National Treasury will table legislation to entrench a fiscal anchor, which he describes as principles-based rather than numeric. It would bind future administrations to fiscal objectives and long-term sustainability, not to a fixed 3% deficit. For more on this, see our report on how debt stabilises and Treasury drafts the fiscal anchor.
Inflation and fuel
The government will forgo R10 billion in fuel levy income over the next two months to cushion the surge in fuel prices, according to the column, which says Brent crude hit a six-month high of $116 a barrel on Friday on fears of renewed US bombing of Iran.
Inflation rose to 4.5% in September, which Odendaal describes as a touch better than expected and still well above the South African Reserve Bank’s 3% target. He expects it to stay between 4.5% and 5% for the next few months, then decline towards a “three handle” by April 2027 as high fuel prices drop out of the year-on-year base. He cites Treasury forecasts of inflation averaging 4.4% in 2026, 3.7% in 2027 and 3.2% in 2028.
Growth is the missing three
Odendaal notes that South Africa last posted 3% real GDP growth in a calendar year in 2011. Treasury’s own forecast shows growth only rising towards 2% by the end of the decade, and this year’s forecast was cut from 1.6% to 1.2% because of the global energy shock. Getting to 3%, he writes, needs deeper reforms and faster implementation than are currently on the table.
Credit ratings
The column says Fitch, Moody’s and S&P Global all have reviews scheduled for late November or early December. Two of the three have a positive outlook: it lists Moody’s at Ba2 (positive), S&P Global at BB (positive) and Fitch at BB (stable), citing LSEG. Odendaal says the improved debt trajectory will count in South Africa’s favour, though the debt level is high compared with other countries in its rating bracket.
Related: Treasury lifts the 2026/27 tax forecast to R2.144tn.
Correction, 29 October 2026: an earlier version of this article said the MTBPS sets targets of a 3% deficit, 3% inflation and 3% growth, that the deficit is just under 3% of GDP this year, that all three rating agencies have a positive outlook, and that inflation was above expectations. The “three threes” is the columnist’s framing, the deficit is 3.9% of GDP, two of the three agencies have a positive outlook, and inflation was slightly better than expected. It has been corrected.
