Chamwe Kaira
Enoch Godongwana says South Africa has reached a turning point in managing its public finances.
Delivering the 2026 National Budget in Parliament, Godongwana said the country had emerged from a period marked by state capture, credit rating downgrades, the Covid-19 pandemic, the Russia-Ukraine conflict and greylisting by the Financial Action Task Force. Public finances were under strain and economic growth had stalled.
He said the government is committed to a reform agenda focused on stabilising debt, investing in infrastructure and improving the quality of spending.
Gross debt is expected to stabilise at 78.9% of GDP in 2025/26 and decline to 76.5% by 2028/29. The consolidated budget deficit narrows to 4.5% of GDP in 2025/26 and falls to 3.1% by 2027/28. The main budget primary surplus will reach 0.9% of GDP in 2025/26 and rise to 2.3% by 2028/29.
South Africa has been removed from the Financial Action Task Force (FAFT) greylist and secured its first credit rating upgrade in 16 years, easing borrowing costs.
Globally, growth is projected at 3.3% in 2026. At home, real GDP growth is forecast at 1.6% in 2026, up from 1.4% in 2025, and expected to reach 2% by 2028. Logistics bottlenecks, weak infrastructure and foot-and-mouth disease remain risks.
Gross tax revenue for 2025/26 has been revised up by R21.3 billion, supported by stronger VAT, corporate income tax and dividends tax collections. The government has withdrawn R20 billion in previously proposed tax increases.
Personal income tax brackets and rebates will be adjusted for inflation. The annual tax-free savings limit will increase from R36,000 to R46,000. The retirement fund deduction cap will rise from R350,000 to R430,000.
The compulsory VAT registration threshold for small businesses will increase from R1 million to R2.3 million. The capital gains tax exemption for the sale of small businesses by older persons will rise from R1.8 million to R2.7 million.
Excise duties on tobacco and alcohol will increase in line with inflation. The general fuel levy will rise by 9 cents per litre for petrol and 8 cents for diesel. The carbon fuel levy and Road Accident Fund levy will also increase.
Total government spending for 2026/27 is projected at R2.67 trillion. The social wage accounts for more than 60% of non-interest spending. Social grants are allocated R292.8 billion, with the old age, disability and care dependency grants increasing by R80 to R2,400 in April 2026.
Over the medium term, more than R1 trillion will go to infrastructure. Of this, R577.4 billion will be spent by state-owned companies, R217.8 billion by provinces and R205.7 billion by municipalities. Transport and logistics take the largest share.
The special appropriation bill includes R5.8 billion for the Passenger Rail Agency of South Africa for rolling stock renewal and R1 billion for South Africa’s subscription to the International Finance Corporation.
Godongwana said the government identified R12 billion in savings through spending reviews and efficiency measures, including scaling down the public transport network grant and strengthening grant beneficiary verification to reduce fraud.
