SOUTH AFRICA IS TURNING THE CORNER FOR THE FIRST TIME IN 17 YEARS
- BEE NEWS
- 6 days ago
- 3 min read
Luke Fraser | 25 February 2026
Finance Minister Enoch Godongwana says South Africa is finally seeing a shift following over a decade of financial struggles, with debt now stabilising after 17 years.
Speaking at the 2026 National Budget, Godongwana said that South Africa is starting to turn the corner.
Over the last decade, South Africa has been decimated by state capture, credit downgrades, the Covid-19 pandemic and the grey listing by the Financial Action Task Force (FATF) in 2023.
“Faced with this crisis, we chose not to be defined by it. Instead, we turned it into a catalyst for change,” said Godongwana.
“We committed to a clear reform agenda and a disciplined fiscal strategy built on three principles: stabilise debt, invest in infrastructure and spend better.”
He said that South Africa is now starting to see results, with debt set to stabilise for the first time in 17 years. Debt is now expected to fall in the coming years.
The minister said that the budget deficit has narrowed significantly, and debt-service costs are also falling. There have been several key improvements, according to the Minister:
South Africa has been removed from the FATF grey list.
It secured our first credit rating upgrade in 16 years.
Borrowing costs have eased, creating space for growth and development.
The consolidated budget deficit has narrowed to 4.5 per cent of GDP for 2025/26, an improvement from 4.8 per cent that we estimated in the 2025 Budget.
The deficit falls to 4% in 2026/27 and 3.1% the year after. He noted that gross debt stabilises as a share of GDP in 2025/26, at 78.9%.
National Treasury said that the gross debt will then reach 77.3% of GDP in 2026/27 and decline to 76.5% by 2028/29.
“The slightly higher debt peak this year reflects weaker nominal GDP growth and our decision to take advantage of strong investor demand in domestic and global markets by increasing issuance in 2025/26,” said the minister.
The main budget primary surplus, which ignores income expense, stands at 0.9% of GDP for 2025/26.
In the next financial year, the primary surplus is expected to reach 1.6%, and then 1.9% in 2027/28, and 2.3% by 2028/29.
The minister added that the growth outlook is steadily improving. National Treasury expects real economic growth of 1.6% in 2026, which will beat its 1.4% estimation for 2025.
“This improvement reflects the continued strengthening of economic performance from the second half of 2025,” said the minister.
“Over the medium term, growth is expected to average 1.8 per cent, reaching 2 per cent by 2028.”
Beats own estimates
South Africa has also beaten its own tax goals for the 2025/26 financial year, with tax revenues revised upward by R21.3 billion.
Godongwana said that South Africa’s tax system has demonstrated resilience amid slow economic growth.
For 2025/26, the gross tax revenue was revised up by R21.3 billion compared to the initial 2025 Budget.
This came off the back of higher-than-expected net VAT, corporate income tax and dividends tax collections, improving the in-year outlook.
Despite the weak growth environment, South Africa has benefited from a commodity boom, particularly gold and platinum, which have recorded massive price increases over the last year.
Following improved results, the government decided to withdraw the R20 billion in tax increases provisionally included in the May 2025 Budget.
“The improving fiscal position allows us enough room to withdraw the proposed tax increases, without putting fiscal sustainability or economic activity at risk,” said the minister.
Gross tax revenue is estimated to reach R2.01 trillion, which is R21.3 billion above 2025 Budget estimates.
Over the medium-term expenditure framework, tax revenues are set to rise from R2.13 trillion in 2026/27 to R2.38 trillion in 2028/29, and the tax-to-GDP ratio will average 26.1%
After two years with no inflationary relief, personal income tax brackets and medical tax credits will be fully adjusted for inflation. Other tax thresholds and limits are also adjusted for inflation.
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