Finance Minister Enoch Godongwana’s presentation to parliament is not expected to include tax changes, but rather revenue and expenditure updates and proposals.
For the fiscal year to date, 2026/27, the first five months show expenditure has risen to 42% of budget, versus 41% of budget this time last year, with data on the sixth month to be published by National Treasury at the end of October.
An improvement in revenues has occurred, at 39% of budget versus 37% this time last year on the rally in precious metals prices. However, the risk is that government eats into this improvement, as it did last year, with higher planned spend.
The outcome for the current financial year to date shows revenue at R812bn for the first five months of 2026/27, versus main budget revenue for the year at R2 082bn, and five twelfths of this R868bn, which means the first five months are below budget.
From an expenditure perspective, year to date R1 001bn has been spent out of R2 383bn, with five twelfths of this R993bn, and so expenditure is well over budget for the year so far, given available data for the five of the twelve months.
LISTEN: MTBPS 2026 | More revenue, less borrowing?
Stronger revenue offers an opportunity to reduce borrowing. Will spending pressures limit the gains? Ahead of the 2026 Medium-Term Budget Policy Statement (MTBPS), Investec’s Annabel Bishop and Tertia Jacobs to examine the choices facing National Treasury.
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In this episode of No Ordinary Wednesday, our economists discuss spending discipline, the proposed fiscal anchor and why rising bond yields do not necessarily signal weaker confidence in South Africa.
Fiscal deficit runs wider than budgeted
Currently, on the available data, the preliminary deficit is -R189bn, with the comparable main budget deficit for the 2026/27 year -R301bn, and five twelfths of this -R125bn. The fiscal deficit is notably wider than currently budgeted for to date.
There is still one missing month for half year, September, which will be published around the end of the month, but revenue will have to rise substantially, and expenditure fall to move towards half of the budgeted deficit by half of 2026/27.
While the government finance figures are not yet encouraging, they do point to less of a worsening of the budget compared to last year when borrowings were increased in order to fund expenditure in a planned overspend year.
Markets await news on fiscal anchors, key for fiscal consolidation (reducing debt and deficits as a % GDP), with flexible, but significant; limits to spending and borrowing to rein in debt and create fiscal buffers, with an improving growth outlook.
Additional spending absorbs much of the revenue gain
Last year’s MTBPS saw additional expenditure of R15.8bn proposed, 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.
In addition, there is additional spending for 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 contingency reserve was revised up by R5bn to R13.5bn, to provide funding for the municipal elections and some monies detailed for freight rail rehabilitation, with the revenue overrun at R19.7bn estimated in last year’s MTBPS.
Consequently, the budget deficit only narrowed to -4.7% of GDP for 2025/26, versus -4.8% projected in May 2025’s Budget, and the -4.5% of the Bloomberg consensus (all as a % of GDP), but then was revised to -4.5% of GDP in the 2026 Budget.
Markets focus on debt and deficit risks
For 2026/27 the budget deficit is estimated at -4.0% of GDP in the 2026 Budget, and this is our forecast as well, although current risks are that it is revised closer to 4.1% of GDP if expenditure continues to run ahead of budget, and in later years too.
Financial markets will be watching the proposed debt and deficit figures in this year’s MTBPS very closely, along with any additional allocations for expenditure, with the GNU and the public not finding funding via tax increases palatable.
Markets reacted negatively to the (leaked) February and March budgets last year, with South Africa’s ten-year bond yield rising. In particular, a rise above the projected 77.3% of GDP debt ratio for this year would elevate SA bond yields.
Next year the debt ratio is projected at 77.0% of GDP and 76.5% of GDP the year after, moving towards 65% in the 2030s decade. Any significant deviation in these projections would be negatively met by financial markets.
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