By Koketso Mamabolo
The good news was not just for the world’s elite gathered in the Alps earlier this year. In his State of the Nation Address the President expanded on the positive message, acknowledging the long road still ahead, and describing a story of resilience and progress. In the third act of this good news tour, the Budget Speech, Finance Minister Enoch Godongwana announced that this year is a fiscal turning point.
Riding on the momentum of structural reforms, lower interest rates and higher investment, growth is expected to reach 1.6%, up 0.2% from 2025. Debt is expected to stabilise this year and begin a downward trajectory which will unlock funds to support service delivery.
“Five years ago, the outlook was stark. State Capture had hollowed out critical institutions and weakened state owned entities. South Africa had been downgraded to junk status by the last of the three major credit rating agencies in 2020,” said the Minister.
“The devastation of the coronavirus pandemic coupled with the Russia-Ukraine conflict had dealt a blow to global growth. And in 2023, the Financial Action Task Force had placed South Africa on its grey list. The warning lights were flashing.”
The response was emphatic. A reform agenda was crafted and fiscal discipline was the name of the game. As a result, South Africa is showing signs of heading in a positive direction.
For the first time in almost two decades debt will stabilise, the country has been removed from the FATF’s grey list, and has also secured its first credit upgrade since the 2010s.
Reforms have focused on specific sectors which have the potential to drive inclusive growth and form the backbone of the economy, including the energy and transport sectors, and Operation Vulindlela has already progressed onto its second phase which is set to unlock even more growth.
“These are signals of restored credibility. Of renewed resilience. And of a nation regaining its footing. The lesson is a simple but powerful one: steady structural reform and responsible public finances are the bedrock of a prosperous and more inclusive South Africa.”
3 things you need know from Budget 2026
1. R20-billion in tax increases scrapped
Under the guidance of outgoing SARS Commissioner Edward Kieswetter, who was given a standing ovation during proceedings, the tax system has shown remarkable improvement and the Minister hailed its resilience despite slow economic growth. Gross tax revenue has been revised up by R21.3-billion due to higher-than-expected net VAT and corporate income tax, among other things. This has brought relief for the public with increases announced in last year’s speech withdrawn without risk to the fiscus and economic activity.
2. More tax relief for households
Along with adjusting personal income tax brackets and rebates in line with inflation, the Minister also announced an effort to encourage South Africans to save and invest by proposing an increase to the limit on tax-free annual investment from R36 000 to R46 000 per year. The limit on retirement fund deductions has also been raised from R350 000 to R430 000.
3. Small business support
Of the 1 200 South Africans who sent comments and suggestions to National Treasury for the budget, one tip from a small business owner in Gauteng, Renette Oosthuizen, has resulted in an increase in the VAT registration threshold from R1-million to R2.3-million. Additionally, the capital gains tax exemption for the sale of small businesses for older persons has increased by almost a million rand, offering small business owners more tax relief.
