Fiscal stability & international outlook 

• Debt stabilises for the first time in 17 years and will continue to fall 
• Budget deficit narrowed to 4.5% of GDP (2025/26), down from 4.8% estimated in 2025 
• Gross debt stabilises at 78.9% of GDP in 2025/26, falls to 77.3% in 2026/27, and declines to 76.5% by 2028/29 
• South Africa removed from FATF grey list 
• First credit rating upgrade secured in 16 years 
• Borrowing costs have eased 

Economic Outlook 

• Real economic growth projected at 1.6% for 2026 (up from 1.4% estimated in 2025) 
• Medium-term growth expected to average 1.8%, reaching 2% by 2028 
• Global growth is projected to be 3.3% 

Fiscal Strategy 

• Accelerate public investment to support economic growth 
• Improve efficiency of public spending 
• Contain public-service wage bill while increasing capital investment 
• Entrench sustainable public finances with principles-led fiscal anchor  
• Main budget primary surplus reaches 0.9% of GDP in 2025/26, expanding to 1.6% in 2026/27, 1.9% in 2027/28, and 2.3% by 2028/29 

Revenue & Tax Measures 

• Gross tax revenue revised up by R21.3 billion 
• Withdrawal of R20 billion in tax increases from May 2025 Budget 
• Personal income tax brackets and rebates adjusted for inflation 
• Tax-free investment limit increased from R36,000 to R46,000 annually 
• Retirement fund deduction limit raised from R350,000 to R430,000 
• Capital gains tax exemption for small business sales increased from R1.8m to R2.7m 
• Excise duties on tobacco, alcohol and fuel levies to increase by inflation 

Structural Reforms 

• Energy: Stabilising electricity supply and building competitive renewable energy market through regulatory reforms 
• Logistics: Dismantling rail and port bottlenecks; bolstering public-private rail investment while retaining state ownership 
• Local Government: Shifting to performance-linked utility model for water and electricity services 

Financial Sector Reforms 

• Crypto assets to be included in capital flow management regime 
• Easing restrictions on cross-border capital flows for domestic asset managers 
• Data infrastructure prioritised as critical national asset 

Spending Priorities (2026/27: R2.67 trillion) 

• Social wage accounts for 60% of non-interest spending 
• Basic education, health and social protection: 70.3% of social wage 
  

  • Supporting 13.6 million school children 
  • Healthcare to 84% of population 
  • Social grants to 26.5 million beneficiaries 

• Social grants allocated R292.8 billion 
• Peace and security spending increases to R291.2 billion by 2028/29 
• Border Management Authority: Additional R990 million to fill 738 positions 
• Defence: R2.7 billion added to improve operations, including to maintain the South African Air Force’s fighter capability; R1 billion to the police service; and R1 billion to the SANDF through the CARA fund for the fight against organised crime 

Infrastructure 

• Public-sector spending to exceed R1 trillion over medium term 
  

  • R577.4 billion by state owned companies and other public entities 
  • R217.8 billion by provinces 
  • R205.7 billion by municipalities 

• Budget Facility for Infrastructure approved R21.9 billion for five major projects 
• Infrastructure bond issued in 2025, raising R11.8 billion 
• PRASA rolling stock: R5.8 billion allocated 

Special Appropriation 

• R1 billion for South Africa’s share subscription to the international finance corporation 
• R700 million for the Department of Communications and Digital Technology 

Targeted Savings 

• Public Transport Network Grant scaled down by R8.4 billion over three years 
• Enhanced grant authentication to reduce fraud: R3 billion savings