The 2026 Medium Term Budget Policy Statement

Publication Date: 22/10/2026

The 2026 Medium Term Budget Policy Statement (MTBPS) achieves two of South Africa’s economic imperatives: continuing its successful fiscal consolidation initiatives and providing cost of living relief to households and businesses, despite a volatile, global political and economic environment.

The MTBPS clearly illustrates that responsible fiscal management and macroeconomic stability are necessary preconditions to free-up sustainable spending on social and economic development and infrastructure. Social wage spending – including health, education, social development and the provision of shelter and services to low-income households – constitutes 60% of non-interest expenditure. Government was also able to allocate R10 billion to temporarily reduce the fuel levy, offering some relief on the cost of fuel for households and businesses.

South Africa’s debt-to-GDP ratio, which stabilised at 78.4% in 2025/26, and its associated debt servicing costs, are still uncomfortably high, but the narrowing budget deficit and growing primary surplus – where government revenue exceeds non-interest spending – are paying off. This progress supports the prospect of further upgrades to South Africa's sovereign credit ratings.

The ongoing work on the adoption of a fiscal anchor will strengthen South Africa’s long-term commitment to responsible fiscal management. It is important that the anchor is enforceable, so that future administrations can be held to sustainable fiscal policies.

Efforts to facilitate infrastructure investment are central to the success of plans to boost inclusive economic growth. While infrastructure grants and credit guarantees are important support mechanisms, the challenges to investment in infrastructure include poor project preparation and management and a lack of coherent regulation and approval processes, among others.

Improved financial management and effective spending across government are also vital to the success of growth initiatives. While calls for South Africa to increase spending are understandable given the needs of the country, unless the money is well spent it will do little to boost economic growth or social development, while increasing the debt burden.

The allocations to combatting gender-based violence (GBV) and crime and corruption are fully supported by the Banking Association South Africa (BASA). Crime blights the lives of all South Africans, destroys social and business infrastructure, and hampers investment. BASA will continue to support National Treasury’s efforts to keep South Africa off the Financial Action Task Force’s grey list of countries that have weaknesses in their ability to fight financial crime.

BASA will work with government on the Unclaimed Financial Assets Centralisation Framework. The association supports reforms aimed at improving the tracing of beneficiaries and reuniting unclaimed assets with their rightful owners. BASA looks forward to commenting on National Treasury’s draft legislative amendments when they are published.

It is a cause for concern that much of the fiscal improvement reflected in this MTBPS is due to a tax windfall, generated by an increase in commodity prices. Without the sustainable, increasing tax revenue that comes with economic growth, South Africa’s fiscal recovery and investment and expenditure plans remain vulnerable.

As ever, the economic growth projections for the coming years remain woefully short of what is required: only 1.6% for 2027. As the Minister of Finance, Enoch Godongwana pointed out, National Treasury can only raise and allocate funds. Using that money to effectively execute a coherent growth policy is the urgent responsibility of all of government.