Budget 2026
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South Africa’s 2026 National Budget, delivered by Finance Minister Enoch Godongwana, has been met with a generally positive reception, particularly for its focus on economic growth, tax relief, and strategic reforms. According to Professor Fanie Joubert, an economist from the University of South Africa (Unisa), the budget contains several positive measures, which he believes will support the country's economic outlook, but he also highlights some areas where caution is needed, especially regarding growth projections and debt management.
Positive Economic Outlook with Key Reforms
In his initial assessment, Joubert acknowledged the overall positivity of the budget, noting that financial markets reacted favorably to the speech, reflected in movements in both the JSE (Johannesburg Stock Exchange) and the Rand. “The general feel is that the Minister delivered a ‘positive’ budget, which should be supportive to the economic growth outlook of the country,” he said.
The budget introduces tax relief measures targeting both businesses and households. Small businesses benefit from the increase in the VAT registration threshold, which will reduce the compliance burden. For households, income tax bracket adjustments and increases in medical tax credits provide some financial relief. Prof. Joubert believes these measures will offer much-needed support, especially as inflation and interest rates have recently shown signs of moderation. “These tax adjustments are welcome, as both businesses and households have been under significant financial pressure in recent months,” he stated.
Economic Growth: A Major Challenge
Despite the positive changes, Prof. Joubert cautioned that economic growth remains a major challenge for the country. South Africa’s growth projections, currently set at 1.6% for 2026, are seen as an improvement, but Joubert noted that much hinges on the success of growth-enhancing reforms. He specifically highlighted areas such as energy, transport, telecommunications, and visa reforms as key sectors targeted for improvement.
“These reforms are great news,” he said, “but as always, one hopes that the implementation of these reforms will receive the necessary attention and urgency to deliver the desired outcomes.” Prof. Joubert stressed that, while these reforms are welcome, timely implementation is critical for ensuring they have the intended impact on the economy.
However, he raised a concern about South Africa's debt-to-GDP ratio, which, although stabilizing, remains a significant issue. He emphasized that the country’s debt levels have been rising for the past decade and are reaching levels that could raise concerns over sustainability. “The stabilisation of South Africa’s debt-to-GDP ratio is important, as it has been rising strongly over the last decade. These levels create worries over its long-term sustainability,” said Prof. Joubert. While he acknowledged the government's efforts to manage debt, he emphasized that the country still faces significant challenges in balancing its fiscal obligations.
Budget Deficits and Global Risks
Despite some progress in stabilizing debt, Joubert expressed caution regarding the government’s forecasts. “The forecast provided by National Treasury is based on an optimistic economic outlook,” he explained. “However, this forecast is contingent on a variety of factors that may or may not materialize, especially in an uncertain global environment.”
South Africa continues to run budget deficits, which Prof. Joubert noted will add pressure on the country’s debt levels. “The goal of maintaining a positive primary balance is commendable, but South Africa continues to run noticeable budget deficits, which will continue to put strain on the cumulative debt levels,” he said. This means that even though the budget is aiming to stabilize debt, the persistent deficits could continue to weigh on South Africa's fiscal position.
Education and Training Allocations: A Positive Step, but Limited Growth
A notable aspect of the 2026 Budget is the additional allocations to the education sector, particularly to basic education. Prof. Joubert welcomed this development, stating that investing in basic education is vital for the country’s long-term prosperity. “Additional allocations to basic education are welcomed. This is a crucial area, especially in a country like South Africa, where access to quality education remains a significant challenge,” he said.
However, PJoubert expressed concern about the future of post-education and training. He pointed out that National Student Financial Aid Scheme (NSFAS) funding growth is set to remain fairly flat over the medium term. “While there is some positive movement in terms of basic education funding, the limited growth in NSFAS aid for tertiary education could hinder many young South Africans from accessing higher education opportunities,” he noted.
Conclusion: A Well-Balanced Budget with Risks Ahead
In conclusion, Professor Joubert stated that the 2026 Budget is a well-balanced document that reflects a cautious but positive approach to managing the country’s fiscal situation. “The Minister seems to have delivered a well-balanced budget, but there are some concerns over the optimistic forecasts, especially given the uncertainties in the global environment,” he concluded.
While the budget includes positive steps for tax relief, economic reforms, and education funding, Prof. Joubert urged that caution be exercised in the face of ongoing budget deficits and the risks posed by global economic instability. He called for rigorous attention to be paid to the execution of reforms and the need for long-term strategies to address South Africa’s structural economic challenges.