Budget 2026 preview signals fiscal discipline and infrastructure push

AS SOUTH Africa's minister of finance, Enoch Godongwana prepares to deliver the national budget later this week, leading economists and tax specialists expect a pragmatic, disciplined and growth conscious framework that builds on the tone set in last year’s medium term budget policy statement.

- ASHLEY LECHMAN

While few dramatic policy shifts are anticipated, experts believe the emphasis will fall squarely on fiscal consolidation, infrastructure investment and stronger tax enforcement as government works to stabilise debt and support economic recovery.

Fiscal consolidation under the spotlight

Frank Blackmore, Lead Economist at KPMG South Africa, believes this year’s budget is likely to be steady rather than sensational.

“This year’s Budget is going to be a good Budget and the reason why I say so is because I think there is going to be few changes both on the expenditure side as well as the revenue side of this year’s budget because the tone has been set by the medium term budget policy statement last year,” Blackmore said.

Blackmore will be watching government’s commitment to fiscal consolidation closely, particularly debt to GDP and deficit to GDP ratios.

“These should be declining as we turned the corner on those aspects in the last fiscal year. The importance of this would be less money going towards servicing this debt and that means more money available for service delivery,” he said. A key pressure point remains the public sector wage bill, which absorbs roughly a third of total expenditure.

“This is obviously a large element that needs to be moderated in order to stick to our fiscal consolidation plans,” Blackmore noted.

He is also cautious about further state owned enterprise bailouts, warning that such allocations redirect funds away from critical services.

On a more positive note, Blackmore expects continued support for infrastructure. “One of the items that we look forward to seeing is the money going towards infrastructure development in electricity, logistics infrastructure as well as municipal and water infrastructure, as these perform the bedrock of future growth initiatives.”

No sweeping tax hikes expected