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South African money, notes and coins.
Finance Minister Enoch Godongwana says the local economy is gaining traction, reflecting early momentum gained from the ongoing economic reforms.
Godongwana presented a R2.7 trillion budget in a more positive backdrop, despite the global uncertainty that is still lurking.
He says growth is gaining momentum, supported by continued structural reforms, improving confidence, lower interest rates and higher investment.
The local economy is expected to have grown by 1.4% in 2025, up from 0.5 per cent in 2024.
It’s forecasted to grow by 1.6% this year and 1.8% next year.
National Treasury says the risks to the outlook are the continued logistics challenges, weak public infrastructure and exposure to climate and weather‑related shocks.
Some of the positive developments over the past year include South Africa’s removal from the Financial Action Task Force grey list which has boosted investor confidence and contributed to a sovereign credit rating upgrade by S&P Global.
The lower borrowing costs are also expected to support growth going forward.
National Treasury however says structural constraints continue to limit economic growth and investment.
It says growth levels remains well below the levels needed to meaningfully reduce socio-economic challenges such as unemployment.
Godongwana says, “Critical reforms to increase GDP growth, improve government efficiency and scale up public investment have been prioritised to add momentum to the economic recovery”.
https://www.youtube.com/watch?v=y_90yrW5108
Revenue collection
National treasury says revenue collection for the current year is stronger than what was expected at the time of the 2025 Budget.
The expected outcome for tax and non-tax revenue for 2025/26 is revised to R1.98 trillion in the latest estimates, up from R1.95 trillion in the 2025 Budget. The department says this is as a result of steady economic growth and commodity price increases.
Gross tax revenue estimate for 2025/26 has been revised up by R21.3 billion from the 2025 Budget estimate.
In its Budget Review, National Treasury says, “The higher-than-expected net VAT, corporate income tax and dividends tax collections improved the in-year outlook, although personal income tax and specific excise duty collections are expected to fall short of 2025 Budget projections”.
The department says provisional corporate tax collections have shown broad-based growth, other than in the manufacturing sector where revenue declined.
It says the R20 billion tax increase previously pencilled in for the 2026 Budget is withdrawn and personal income tax brackets and medical tax credits will be fully adjusted for inflation, after two years with no inflationary relief
Budget deficit narrows and government debt is stabilising
Main budget deficit narrows from 4.5 percent of GDP in 2025/26 to 2.9 per cent by 2028/29
Government debt is stabilising for the first time in 17 years. National Treasury says “the debt ratio will stabilise in this financial year and decline thereafter”.
Director General at the National Treasury Dr. Duncan Pieterse says, “Gross government debt stabilises at 78.9 per cent of GDP in 2025/26 and is expected to decline to 76.5 per cent of GDP over the medium term”.
Pieterse says however that government will continue to borrow more in the current year both in foreign and local debt as fiscal metrics improved.
