Finance Minister Enoch Godongwana’s Budget Speech today (February 25, 2026) delivered a much-needed dose of positivity after last year’s political turbulence over VAT hikes. The tone was upbeat, crediting reforms, stronger revenue, and disciplined spending for putting public finances on a firmer footing. No major tax increases, some relief for households, and a focus on efficiency—it’s a “turning point” budget, as Treasury describes it.
Key Fiscal Numbers at a Glance
Here’s a quick snapshot of the main projections:
| Metric | 2025/26 (Revised) | 2026/27 | 2027/28 | 2028/29 |
|---|---|---|---|---|
| Real GDP Growth | 1.4% | 1.6% | 1.8% | 2.0% |
| Budget Deficit (% GDP) | 4.5% | 4.0% | 3.1% | ~3.0% |
| Gross Debt (% GDP) | 78.9% (peak) | 77.3% | 76.8% | 76.5% |
| Primary Surplus (% GDP) | 0.9% | 1.6% | 1.9% | 2.3% |
| Total Spending | – | R2.67 trillion | – | – |
Sources: National Treasury 2026 Budget Review.
Major Announcements
- No Tax Hikes: The R20 billion in proposed increases (floated last year) is off the table, thanks to SARS overperforming by R21.3 billion. VAT stays at 15%. Personal income tax brackets and medical tax credits get full inflation adjustments (first in three years), providing ~R13.7 billion in relief. Small business VAT threshold rises to R2.3 million, and tax-free savings accounts get a boost (annual limit to R46,000).
- Spending Priorities: R2.67 trillion for 2026/27, with 60%+ on the “social wage” (education, health, grants). Social grants get modest hikes: Old-age/disability to R2,400 (+R80), child support to R580 (+R20), SRD grant stays at R370 (extended to 2027). R5 billion contingency for disasters.
- Fiscal Strategy: Four pillars—boost growth via investment, cut waste (e.g., ghost employees), tame the wage bill, and anchor debt. Debt stabilizes this year (first in 17 years) and falls, easing borrowing costs.
- Reforms and Risks: Praise for energy/logistics progress and FATF grey-list exit. But warnings on bottlenecks, foot-and-mouth disease, and municipalities (e.g., Joburg on notice). Treasury eyes efficiency drives and targeted municipal support.
Market Reaction: Thumbs Up
The rand strengthened to around R15.85–15.89/USD (up ~0.7% intraday), near its best since early February. JSE All Share jumped 1.53% to 127,073. Analysts called it “constructive” and credit-positive, with potential for more rating upgrades.
This is South Africa’s strongest budget in years—fiscal credibility is back, debt’s peaking (not exploding), and taxpayers get a breather. The 1.6% growth forecast is modest but realistic, hinging on reforms sticking. Risks like infrastructure woes and low investment remain, but the GNU’s unity (so far) and SARS’s collection muscle are bright spots. For ordinary South Africans, it’s relief without recklessness; for investors, it’s a green light. If momentum holds, 2028’s 2% growth could feel like a win.