What Happened
On Wednesday, Finance Minister Enoch Godongwana delivered the budget speech for 2026 in Parliament, highlighting the National Treasury’s commitment to prioritising the repayment of South Africa’s national debt. The budget reflects a significant shift towards fiscal responsibility, with no major tax hikes and adjustments made to personal income tax brackets and medical tax credits for the first time in three years. Notably, the previously planned R20 billion tax increase has been withdrawn.
Why It Matters
The budget speech marks a turning point in South Africa’s public finance management, especially following the challenges posed by state capture, the COVID-19 pandemic, and the Russia-Ukraine conflict. Godongwana’s optimistic tone contrasts sharply with the previous years’ budget chaos, indicating a potential recovery in the country’s fiscal health. The tax-free savings account limit has been increased to R46,000, providing some relief to individual taxpayers and encouraging savings.
What’s Next
Looking ahead, the National Treasury plans to conduct a detailed analysis in 2026 to prepare legislation aimed at anchoring sound fiscal principles in law. The government will also implement updated global minimum tax rules in the 2026/27 fiscal year, which are expected to reduce profit shifting by multinational corporations. The consolidated budget deficit is projected to be 4% of GDP for 2026, with expectations to narrow to 3.1% by 2028/29.
