Africa-Press – South-Africa. South Africa’s 2026 Budget could be near, or even below, the projections set in the medium-term budget policy statement (MTBPS) last year, thanks to an improved deficit outcome to date.
This would be a welcome break from the budgets over the past few years, where fiscal slippage had become the norm, and the National Treasury had to make steep cuts or increase borrowing to fund the budget.
According to Investec Chief Economist, Annabel Bishop, South Africa’s deficit widened to -5.0% of GDP in 2024 from -4.8% and to -4.7% from -4.6% as a degree of fiscal slippage persisted across all years to that point.
Debt as a percentage of GDP also deteriorated over time, from 77.4% to 77.9% for the 2025/26 estimate.
“Fiscal slippage has become a general trend in South Africa, as in most cases the fiscal metrics deteriorate,” she said.
However, with the latest government finance figures for the government financial year to date, “there is a chance now of some improvement in the outlook,” she said.
The revenue outcome to date is above last year at this point, at 71.2% versus 70.7% of total revenue budgeted for 2025/26.
The budget deficit is -R243 billion to date, down from -R286 billion a year ago, while expenditure is R1,656 billion, up from R1,565 billion a year ago.
“At nine months of the year, the fiscal deficit is at -R243 billion, and for the full twelve months at this pace it would be -R327 billion, which is under the 2025/26 revised fiscal deficit in the MTBPS—by R26 billion, if the deficit growth persists at this milder pace,” Bishop noted.
Consequently, with the budget deficit so far in the first nine months of 2025/26 running below the likely current full-year outcome—if the deficit growth persists at the current mild pace—the budget may avoid fiscal slippage without additional expenditure, the economist said.
Markets looking to SONA for clues
Investec Chief Economist, Annabel Bishop
While a narrower budget deficit would be good news for South Africa and point to an improved trajectory, it isn’t without its worries.
Notably, SARS’ debt collection data shows that collections are currently R24 billion under target for the first nine months of 2025/26.
These monthly figures compare to the goal of raising R35 billion additional revenue in 2025/26, over and above the R100 billion projected baseline from the prior year (2024/25).
At the same time, additional spending of R15.8 billion was proposed in 2025’s MTBPS, including R4 billion to bolster SARS collections, R2 billion to rebuild Parliament buildings, R5.2 billion in rollovers from 2024/25 and R1 billion to the IEC for the 2026 municipal elections.
According to Bishop, markets will be looking to President Cyril Ramaphosa’s State of the Nation Address next week (12 February 2026) for an indication of the budget reality.
“The SONA tends to touch on the same themes each year, comparing progress against the prior year and can give insight into the budget,” she said.
“However, the SONA also has a degree of blandness as the same topics resurface.”
Business and investors will focus on updates and plans to reduce or eliminate the freight constraints, poor governance and crime and corruption, she said.
While crises like load shedding are seen as largely eradicated, load reduction—inadequate transmission capacity to meet demand—remains a key problem for the security of electricity supply.
“The water and sanitation crises still persist, along with high unemployment, poverty and weak growth,” Bishop said.
This is in addition to insufficient progress on reducing red tape and bureaucratic processes to further improve the ease of doing business.
While investors and ratings agencies in particular are signalling a shift in sentiment, Bishop warned that they are not blind to key issues that have been raised for years.
“The budget could be near, or below, MTBPS projections on improved deficit and deficit outcomes to date if they persist, (but) fiscal consolidation is still needed to return South Africa to an investment grade credit rating,” she said.
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