Anchor Capital sees South Africa’s fiscal path supporting bond markets despite oil shock
TLT•Anchor Capital says South Africa’s medium-term budget keeps fiscal consolidation on track despite the oil shock and weaker growth, with the deficit projected to narrow to 3.7% of GDP in 2026/2027 from 4.3% in 2025/2026. It warns that one-off revenue receipts, rising food costs and elevated oil prices pose risks.
1. Budget and bond outlook
South Africa’s main budget deficit is projected to narrow to 3.7% of GDP in 2026/2027 from 4.3% in 2025/2026, while gross loan debt peaked at 78.4% of GDP in 2025/2026. Anchor Capital said reliance on one-off revenue receipts poses risks to the fiscal outlook.
2. Inflation and growth risks
The withdrawal of fuel relief and rising food costs threaten Treasury’s 3.8% inflation forecast for 2027, while growth faces downside risks to its 1.6% forecast. Softer core inflation supports holding the repo rate at 7.25% on November 19, though elevated oil prices warrant caution.
