Listen: Budget 2026 | What's at stake?
South Africa’s 2026 Budget arrives at a pivotal moment. Debt is hovering near 78% of GDP. Growth is forecast at just 1.5%. Debt-servicing costs absorb around 5% of GDP. And yet, bond yields have fallen, sentiment has improved and S&P maintains a positive outlook. Is this genuine fiscal stabilisation or simply a window of opportunity? Listen to Investec experts Chief Economist Annabel Bishop and Treasury Economist Tertia Jacobs unpack the upcoming budget.
The Budget on 25th February is expected to be under pressure from the 2025 Medium-Term Budget Policy Statement’s (MTBPS) proposed additional expenditure, while monthly South African Revenue Service (SARS) debt collection data shows collections are currently R24bn under target for the first nine months of 2025/26. These monthly figures compare the expected versus actual monthly cash collections to date in 2025/26 to raise R35 billion additional revenue in 2025/26, over and above R100 billion projected baseline from prior year (2024/25).
For the government finance figures for the year to date, only main budget figures are available, i.e., figures of national government, while consolidated figures include the provinces and local municipalities, but are not available. The revenue outcome to date is above last year at this point, at 71.2% versus 70.7% of total revenue budgeted for 2025/26. The budget deficit is -R243bn to date, less than -R286bn a year ago, with expenditure at R1 656bn versus R1 565bn a year ago.
At nine months of the year, the fiscal deficit at -R243bn and for the full twelve months at this pace would be -R327bn, which is under the 2025/26 revised fiscal deficit -R353bn in the MTBPS, R26bn under if the deficit growth persists at this milder pace. Consequently, with the budget deficit so far (first nine months of 2025/26) running under the likely current full year outcome (if the deficit growth persists at the current mild pace), then the budget may avoid fiscal slippage without additional expenditure.
On a consolidated basis, which are the headline figures in the budget (but unavailable in the monthly data), the budget deficit widened to -5.0% in 2024 from -4.8% and to -4.7% from -4.6% as a degree of fiscal slippage persisted (all as % of GDP). Debt too widened as a % of GDP, from 77.4% to 77.9% for the 2025/26 estimate.
Additional expenditure of R15.8bn was proposed in 2025’s MTBPS, including R4bn to bolster SARS collections, R2bn to rebuild Parliament buildings, R5.2bn rollovers from 2024/25 and R1 billion to the IEC for the 2026 municipal elections. Furthermore, the additional expenditure also includes spending on the Madlanga Commission of Inquiry of R1.6bn, the National Dialogue, Statistics SA, disaster relief, the Office of the Chief Justice, infrastructure costs and carry through costs. The MTBPS also saw GDP growth forecasts lowered for 2026, to 1.5% y/y, 2027 1.8% y/y and 2028 at 2.0% y/y (Investec’s 1.5% y/y, 2.2% y./y and 2.7% y/y respectively).
The Budget could be near, or below, MTBPS projections on improved deficit and deficit outcomes to date if they persist, and fiscal consolidation is still needed to return SA to an investment grade credit rating, with the country still in the BB category. Both Moody’s and S&P now rank SA at BB, and Fitch BB-, below the BBB category which is the lowest category of rating for investment grade, but with South Africa on a positive outlook from S&P currently indicating an upgrade by around 18 months.
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