Government has revised down its economic growth forecast for 2026 to 1.2% from 1.6% projected in the February budget.

Growth is expected to reach 2% by 2029.

Government says it has identified R38 billion in targeted savings to be redirected to social and economic priorities over the medium term.

The South African Revenue Service (SARS) has also collected an extra R17 billion in additional tax revenue due to higher precious metal prices.

National Treasury says the improved fiscal performance was supported by savings and higher than-expected revenue collections.

SA economy has shown resilience

Delivering the Midterm Budget Policy Statement in Parliament Finance Minister Enoch Godongwana noted that the country’s economy has shown resilience despite the spill-over of geopolitical tensions.

“We now forecast real economic growth of 1.2% in 2026, down from the 1.6% projected in February. Growth is expected to reach 1.6% in 2027, and 2% by 2029.  Despite these headwinds, South Africa has shown resilience. Fiscal discipline and a lower inflation target are helping to contain borrowing costs and reduce South Africa’s risk premium. The rand has strengthened and become less volatile.  This reflects the difficult choices we have made to preserve macroeconomic stability and fiscal sustainability.”

Government debt is now expected to stabilise at 78.4% of GDP this year which is 0,5% below the February budget projection.

The mini budget also indicates that the budget deficit will narrow to 4.3% of GDP in 2026, from the 4.5% projected earlier this year. Godongwana elaborates.

“For the first time in nearly two decades, our debt-to-GDP stabilised, at 78.4% of GDP in 2025/26. The primary surplus, where government revenue exceeds non-interest spending, also continues to grow. We are increasing it from 1.7% of GDP this year to nearly 3% by 2030. This will allow us to reduce borrowing, contain debt-service costs and create more space for growth-enhancing investment and essential public services. The budget deficit is also better than we expected in February.”

Much on the strength of government’s finances came from a R17 billion revenue overrun which resulted from the recent commodity price boom driven by higher global prices for gold and platinum group metals among others.

Godongwana says gross tax revenue is projected at R2.14 trillion this year.

“Madam Speaker, the revenue outlook for 2026/27 is stronger than expected, due to higher collections from corporate tax, dividends tax and VAT.  As a result, gross tax revenue for this year has been revised upwards by R17.1 billion compared with the February estimate. A large portion of this improvement is due to higher commodity prices, and these gains are expected to dissipate over the medium term.”

National Treasury says the legislation that outlines a fiscal anchor aimed at maintaining fiscal discipline and keep a tight lid on debt will be gazetted for public comment this week.

Godongwana adds, “To safeguard these gains, government released draft fiscal anchor legislation for public comment in October. The legislation is expected to be tabled in Parliament in 2027.  The proposed legislation sets out fiscal sustainability as a standard into the Public Finance Management Act.  Instead of a rigid numerical rule.  It requires each Administration to commit to its own fiscal objectives, consistent with the electoral mandate.”

Consolidated government spending is expected to reach R2.43-trillion in the 2026-27 financial year.

Government says the additional revenue raised means that increased spending will be dedicated to other areas including the Madlanga, Khampepe and Nkabinde Commissions of Inquiry.

Meanwhile, consumers can also look forward to a temporary fuel relief until January next year.