Finance Minister Enoch Godongwana tabled a medium-term budget on Wednesday that confirms what Treasury has been promising for more than a decade: South Africa’s government debt has stopped rising. Gross debt stabilised at 78.4% of GDP in 2025/26, below the 78.9% peak projected in February, and is now forecast to ease to 76.6% by 2030 and about 66.6% by 2035.
A commodity-driven revenue windfall has given him room to cut the fuel levy for a second time this year, build a bigger disaster reserve and still post a larger primary surplus than he planned eight months ago.
The catch is growth. Treasury cut its 2026 forecast to 1.2% from 1.6% in February, and does not expect the economy to reach 2% until 2029. Much of the extra revenue comes from precious metals prices that Treasury itself expects to fade. Godongwana opened his speech by marking 70 years since the Women’s March, 50 years since the 1976 Youth Uprising and 30 years since the adoption of the Constitution. KPMG South Africa corporate tax partner Itumeleng Nkadimeng noted that the minister framed these milestones as a reminder that political freedom has to be remade through economic progress.
Economists and business largely welcomed the statement. PSG Financial Services chief economist Johann Els described it as friendly to markets, investors and ratings agencies alike, while KPMG South Africa lead economist Frank Blackmore said it contained a great deal of good news. Business Leadership South Africa (BLSA) chief executive Busisiwe Mavuso said the fruits of fiscal discipline were becoming apparent. The harder question, raised in some form by almost every commentator, is whether stability in the public finances can be turned into the faster growth on which the tax base ultimately depends.
| Measure | February 2026 Budget | October 2026 MTBPS |
| Real GDP growth, 2026 | 1.6% | 1.2% |
| Gross tax revenue, 2026/27 | Baseline | Revised up by R17.1bn |
| Consolidated budget deficit, 2026/27 (% of GDP) | 4.0% | 3.9% |
| Primary surplus, 2026/27 (% of GDP) | 1.4% | 1.7% |
| Gross debt, 2025/26 (% of GDP) | 78.9% projected peak | 78.4% |
| Contingency reserve, 2026/27 | Lower | R10bn |
| Fuel levy cut, 4 November to 1 December | None | R1.50/litre petrol, R3/litre diesel |
Sources: National Treasury MTBPS, deficit and primary surplus figures from PSG Financial Services.
The headline achievement is that the debt ratio has turned. BLSA pointed out that government held its course even though the war on Iran, which it says began three days after the February Budget, sent global oil prices sharply higher. On BLSA’s reading, the primary surplus is set to rise from 1.7% of GDP this year to nearly 3% by 2030, with the deficit narrowing to 2.5% of GDP.
Els broke the numbers down further. The consolidated budget deficit improved only slightly, to 3.9% of GDP from the 4% pencilled in at Budget time, which was wider than the roughly 3.5% he had expected. He attributed the gap to additional spending on items that could not have been foreseen in February, and expects the deficit to keep narrowing to 2.5% of GDP by 2029/30. The main budget deficit, a narrower measure, came in at 4.3% of GDP against a February forecast of 4.5%.
For Els, the primary surplus is the more important number. It is now expected to reach 1.7% of GDP this year, compared with 1.4% projected in February, and to rise to 2.9% by 2029/30. He argued that this puts South Africa back in the territory it occupied from the mid-1990s to about 2008, when sustained primary surpluses helped bring the debt ratio down sharply. He cautioned, however, that the debt ratio over the next few years will be slightly higher than projected in February, partly because Treasury has lowered its forecast for nominal GDP. A smaller economy in rand terms makes the same stock of debt look heavier.
That nuance matters. Stabilisation has been achieved largely through revenue strength and spending restraint rather than through growth, and the slower decline in the debt ratio is a reminder that the denominator in the debt-to-GDP equation still needs to grow faster.
Treasury revised gross tax revenue for 2026/27 up by R17.1bn from the February estimate, on stronger corporate income tax, dividends tax and VAT collections, with higher precious metals prices doing much of the work. Els put the overall revenue overrun for the current fiscal year at around R53bn, and said it would have been larger still had government not given up fuel levy income earlier in the year and again for November and December. BLSA noted the unusual combination at work: revenue strengthened even as the growth forecast was cut.
Nkadimeng said KPMG’s cautious optimism ahead of the statement had been largely justified, but agreed with Treasury that part of the improvement rests on commodity prices that may not hold over the medium term. Blackmore made the same point more bluntly: the windfall from commodity prices will not last long, so the question is how well it is used while it lasts.
On Blackmore’s assessment, it is being used well. He said the fear going into the statement was that slower economic momentum would force government to shrink the primary surplus; instead, the extra revenue allowed it to be increased. Godongwana said spending this year will rise by R45.5bn from the February Budget. The adjustments budget includes R6.2bn for unforeseeable and unavoidable expenditure, mostly disaster relief and rehabilitation; R823m for deploying soldiers to support police against gang violence and illegal mining; and R516m for the Madlanga, Kampepe and Nkabinde commissions of inquiry.
Blackmore singled out funding for the commissions working to root out corruption and malfeasance, as well as allocations to protect the social wage, fight gender-based violence and femicide, and tackle crime. Treasury set aside R5.1bn for the response to gender-based violence, including R3.8bn over three years to appoint more than 3,500 social workers, though it stressed that this money has been reprioritised from existing budgets rather than newly found. Els accepted that much of the additional revenue will be absorbed by higher spending, but noted that a large share is destined for infrastructure, which he regards as a clear positive for future growth.
The measure most South Africans will notice is the fuel levy. From 4 November to 1 December, the levy will be cut by R1.50 a litre on petrol and R3 a litre on diesel, after which relief continues at a lower, as yet unspecified, level until 5 January. Treasury does not expect this round to cost more than R10bn, having already given up R17.2bn in revenue on three months of earlier levy cuts. Nkadimeng welcomed the minister’s assurance that the relief will be funded without compromising the sustainability of the budget.
Budget Insurance senior manager Tando Ngibe worked through what it means at the pump. A motorist who fills a 50-litre petrol tank once a week would save about R75 a fill, or roughly R300 a month. That is meaningful money, he said, but because it comes on top of fuel prices that are already elevated, it largely returns consumers to where they were rather than leaving them better off.
The bigger economic effect may come through diesel. Blackmore pointed out that most goods in South Africa travel by road in diesel-powered trucks, so a lower diesel levy should reduce the pass-through of fuel costs into shop prices. Els expects inflation in November and December to come in slightly lower than previously forecast as a result.
If the public finances are the good news, growth remains the problem. Treasury now expects the economy to expand by 1.2% this year and 1.6% in 2027, reaching 2% only in 2029, although Godongwana argued that growth could eventually exceed 3% a year if reforms stay on track. He reaffirmed that government’s strategy for faster growth and healthier public finances rests on four pillars: maintaining macroeconomic stability, implementing structural reforms, building state capability and supporting growth-enhancing infrastructure.
Mavuso said BLSA fully supports those goals and will keep helping government to achieve them. In her view, faster growth is the most effective response to South Africa’s severe unemployment crisis, and because it is a long-term process, every effort to speed up delivery counts, particularly on structural reform and infrastructure.
On reform, the minister restated the priorities in water: restoring operational performance, strengthening governance and technical capacity, cutting water losses, improving revenue collection and changing how water infrastructure is financed. In electricity, he said restructuring Eskom and establishing an independent transmission operator will open the market to competition, attract new investment in generation and speed up expansion of the grid. Els added logistics, visa reform and passenger rail to the list, and argued that these reforms, combined with better infrastructure spending, should lift growth.
Nkadimeng framed the issue from the tax side. Sustainable tax revenue ultimately follows sustainable economic activity, and the growth outlook has weakened since February. The real test, he said, is whether fiscal stability, structural reform and infrastructure investment can be turned into stronger growth, more investment and, in the end, a broader and more durable tax base.
Godongwana also released draft fiscal anchor legislation for public comment, with tabling in Parliament expected in 2027. It deliberately avoids a rigid numerical rule such as a debt ceiling. Instead, each administration will be required to commit to its own fiscal objectives, report against them in every Budget and explain any material deviation to Parliament.
Mavuso said BLSA is comfortable with that design. Credibility, she argued, comes from strong institutions, and an anchor that holds every administration to account at each Budget should translate into lower borrowing costs and greater policy certainty. Nkadimeng said KPMG had hoped for clarity on a fiscal anchor, and the commitment to legislation that embeds stability, transparency and accountability in the fiscal framework delivers it.
The trade-off is worth spelling out. A rule without a number preserves flexibility for future governments facing shocks, but it relies on Parliament and the markets to punish slippage. Its value will depend on how rigorously the required explanations are scrutinised once the current minister, who has built his reputation on discipline, is no longer in the chair.
On infrastructure, the minister said the aim is not simply to spend more but to spend better, shifting the composition of spending towards productive investment. BLSA highlighted this as one of the more important signals in the statement. He pointed to the new Infrastructure Finance and Implementation Support Agency, which consolidates existing units and is already supporting projects with a potential investment value of more than R207bn. Fiscal support approved through the Budget Facility for Infrastructure now exceeds R100bn, and the infrastructure bond has raised more than R14bn.
Godongwana also flagged the fast-tracking of public-private partnerships in municipalities, with amended regulations now before Parliament, and progress on the Credit Guarantee Vehicle, which is due to be operational by 2027. Maintaining existing assets, he added, matters as much as building new ones, a point that will resonate with anyone who has watched roads, rail and water networks decay for want of upkeep.
Els sees this as one of the most encouraging parts of the statement, since tax overruns over the next few years will largely be channelled into infrastructure. That is the kind of spending that can raise the economy’s potential growth rate, rather than simply adding to the consumption bill.
Treasury’s statement carries a clear warning for farmers. It expects the coming El Niño, widely regarded as potentially the strongest on record, to raise costs and reduce agricultural output from late 2026 into 2027, cutting short a run in which agriculture grew by 3.5% in the first half of this year. The contingency reserve has been raised to R10bn for 2026/27 to cover the response to drought and El Niño, as well as further spikes in energy prices.
Blackmore welcomed the decision to set the money aside before any damage is done, noting that it can be reallocated if El Niño proves milder than feared. He also highlighted R1.5bn over the next three years for additional agricultural extension officers, who provide hands-on support to farming communities. Together, he said, the two measures should help prevent weather or a shortage of skills from tipping South Africa into a food crisis.
Juandré Pitout, head of business development at RenEnergy, argued that drought quickly becomes an energy problem on farms. When rain fails, farmers must irrigate more to keep crops alive, and every extra hour of pumping is paid for in diesel or grid electricity. Treasury’s own forecasts point the same way: it expects oil prices to rise by about 41% this year because of reduced exports from the Persian Gulf, and forecasts electricity price inflation of 8.3% in 2026, 8.2% in 2027 and 8.8% in 2028. Pitout, whose company installs solar systems, said farmers cannot control the weather or the oil price, but can control where their power comes from. Solar and battery systems for irrigation pumps and cold storage replace exactly the fuel and grid costs that climb fastest in a dry year, and installations completed now would be running before pumping demand peaks.
Markets have already started to reward the discipline. BLSA noted that the rand has stayed resilient, strengthening and becoming less volatile despite the oil shock, and that the ratings agencies have taken notice: S&P upgraded South Africa in November 2025, Fitch followed in June 2026 with what BLSA described as its first upgrade in almost 21 years, and Moody’s has moved its outlook to positive. Treasury’s director-general told reporters that South Africa’s 10-year bond yield is now roughly level with, and slightly below, that of investment-grade Mexico.
BLSA expects further upgrades on the back of these figures, which would lower borrowing costs for government and business alike. Els shares that view. He expects at least one agency to upgrade at its next review, with the other possibly waiting for the February 2027 Budget. Blackmore added that maintaining or enlarging the primary surplus is exactly what improves the country’s risk profile.
Els also drew attention to changes in how Treasury funds itself. Smaller weekly bond auctions should support the bond market, and the introduction of bond buybacks gives Treasury more flexibility in managing its debt. Over time, he said, continued primary surpluses and gradually falling deficit and debt ratios should ease the pressure from interest payments.
For households, the lesson from the statement may be less about Treasury’s numbers than about their own. Hayley Parry, money coach and facilitator at 1Life’s Truth About Money, said the principles the minister applied to the national accounts, managing debt, spending responsibly and building resilience, apply just as well at home. She stressed that the fuel relief is temporary, tapering in December and ending in early January. Households where every rand is already committed will simply find the month a little easier to get through, but those with some flexibility should think carefully before letting the saving disappear into everyday spending.
Parry suggested using it to pay down expensive debt such as credit cards and personal loans, since every rand spent servicing debt is a rand unavailable for other priorities. The most fundamental rule, she said, remains spending less than you earn. That is hard for many South Africans in the current economy, but knowing exactly what comes in and goes out is the starting point. A mini budget, after all, is about making choices with limited resources, and she urged households to conduct a mini-budget review of their own.
Ngibe made a similar case. Consumers should treat the fuel saving as an opportunity rather than as extra money, avoid taking on unnecessary new credit and set aside even a small amount each month for emergencies, so that an unexpected bill does not have to go on credit. They should also keep protecting what they already have. Financial resilience, he said, depends less on how much people earn than on how well they manage it.
Godongwana has bought himself credibility. The debt ratio has turned, the primary surplus is growing, the ratings agencies are moving in South Africa’s favour, and a fiscal anchor is on its way into law. But much of that progress has been paid for by commodity prices he does not control, and the growth forecast continues to slip. Blackmore said the hope is that the windfalls can be sustained into the February 2027 Budget. Nkadimeng put the more searching question: whether this fiscal momentum can be converted into the growth and broader tax base that would make it last.