Finance Minister Enoch Godongwana will unveil his Budget Policy Statement on Wednesday, 25 February 2026. (Photo: Dwayne Senior / Bloomberg via Getty Images) Finance Minister Enoch Godongwana will deliver his Budget speech on Wednesday, 25 February 2026, with some fresh arrows in his quiver including a rare credit rating upgrade, surging gold and platinum group metals (PGM) prices and slowing inflation.
These factors and others should help steady the finance minister’s aim as he strives to hit the targets needed to contain rising debt levels and meet the goal – in the jargon of economists – of “fiscal consolidation”.
One big order of business is capping SA’s levels at 77.9% of gross domestic product (GDP). For the markets, any significant upward shift from that level would be a deal breaker. But economists broadly expect Godongwana to stay the course on this front.
“SA’s debt burden remains elevated... We anticipate that the National Treasury will confirm the debt stabilisation achieved in FY2025/26, articulate a clear path to reducing the debt ratio towards 70% in the medium term and 60% in the long term, and provide an update on the fiscal anchor policy expected to take effect from April 2027,” said Lullu Krugel, Chief Economist and Sustainability Leader, PwC South Africa.
A “fiscal anchor” is a specific ceiling that a government pledges not to exceed, and in some cases it is a legislative requirement. The International Monetary Fund (IMF) earlier this month reiterated its support for SA to adopt such a policy.
“Reaching the government’s long-term debt goal will take further fiscal action. Establishing a clear, well-designed fiscal rule – based on prudent debt targets – can help encourage discipline, build trust in policies, and reduce borrowing costs,” the IMF said.
The Medium-Term Budget Policy Statement (MTBPS) late last year forecast a steady decline in debt and deficit to GDP ratios – the key measure for a country’s debt burden.
The Budget deficit was projected to narrow from 4.7% of GDP in FY2025/26 to 2.9% by FY2028/29, with the primary Budget surplus improving from 0.9% to 2.5% over that period.
Revenue collection has been surprisingly strong, providing a foundation for optimism. But potential headwinds include economic growth rates that fall short of current projections, which are hardly robust. Most forecasts see 2026 growth in the range of 1.2% to 1.4%.
Cautiously upbeat
Still, the outlook is cautiously upbeat, and this was reflected in the S&P credit ratings upgrade that South Africa received in November – its first upgrade in almost two decades.
Read more: Eskom lights the way to SA’s first credit ratings upgrade in 20 years
This underscores growing confidence that SA is getting a grip on its debt and is slowly beating a path to faster rates of economic growth.
The rally in gold and PGM prices will also aid Godongwana’s cause, recalling 2021/2022 when record PGM prices threw the Treasury a lifeline as producers’ soaring profits translated into a windfall of taxes and royalties.
“It will be a significant contributor to the fiscus if these commodity prices hold. It’s important to remember that PGM prices only really ran in the second half of the year and only really took off in the fourth quarter. So if they stay where they are for an extended period of time there will be significant benefits coming through,” Sibanye-Stillwater CEO Richard Stewart told Daily Maverick.
“When SA starts to feel happy because things are going very well it is often correlated with commodity prices and how things are going in the mining sector.”
Slowing inflation also holds the promise of reducing costs across the board, including for borrowing. This in turn can support a faster pace of economic growth. Annual consumer inflation is currently 3.5%, and the South African Reserve Bank is determined to anchor it around 3.0%, armed with a new target range that is effectively 2.0% to 4.0%.
What it means for you
A convincing Budget that draws a firm line in the sand over rising debt will be welcomed by the markets and put more wind in the sails of the rand. One of the odious traits of SA’s debt levels is that much of the capital borrowed has been poorly spent, squandered and stolen, depriving the Treasury of funds for things like education, health and basic government services.
Capping and reducing debt and spending scarce capital more wisely would enable the government to do its job and deliver the services that all South Africans across income levels deserve while laying the foundation for faster growth and job creation.
Other bright spots Before this Budget include the existing of the Financial Action Task Force grey list, which is another boost to investor confidence.
Worrying gaps that will need to be plugged include the termination of USAid funding for HIV/Aids and other health programmes.
Analysts do not expect a rerun of last year’s debacle when a last-minute spat over VAT torpedoed the initial reading of the Budget.
“With 2026 being an election year, political parties will want to avoid a repeat of last year’s Budget, and a stronger revenue performance suggests there is enough fiscal room to stave off unpopular tax increases,” said Jee-A van der Linde, Senior Economist at Oxford Economics Africa. DM