South Africa's public finances are in better shape than expected, Finance Minister Enoch Godongwana told Parliament on Wednesday in the Medium-Term Budget Policy Statement, the country's mid-term budget update.
Treasury raised its projected tax revenue for the 2026/27 financial year by R17.1 billion compared with February's estimates, helped by stronger collections from corporate income tax, dividends tax and VAT. Officials cautioned, however, that part of the windfall is tied to higher commodity prices and may not last, arguing the extra income should be managed carefully rather than treated as permanent.
Government debt stabilised at 78.4 per cent of gross domestic product in 2025/26, according to Treasury figures. The strategy is to widen the primary budget surplus — revenue minus spending before interest payments — gradually narrow the overall deficit, and bring down debt-servicing costs to free up room for public services and infrastructure.
The statement also brought temporary fuel levy reductions aimed at easing pressure on households and businesses. The rand held steady ahead of the speech at roughly R16.40 to the U.S. dollar, with investors focused on whether the improved revenue picture can survive weak growth.
Challenges remain formidable: growth is sluggish, household budgets are strained, and consumer inflation ticked up to 4.5 per cent in September on surging transport costs, Statistics South Africa reported the same day. Treasury's message was that the fiscal corner is being turned — slowly, and with little margin for error.
