DUMISANI JANTJIES | Middle East war could derail SA’s now outdated budget

There is an eerie and unsettling rhythm to the recent global history South Africa is being forced to dance to.

On February 22 2022 the finance minister tabled budget proposals promising that, despite an uneven recovery, the government was charting a course towards growth and fiscal sustainability. The Treasury projected real GDP growth of 2.1% for 2022, confidently outlining expected revenue collections and debt stabilisation measures.

Exactly two days later, on February 24, Russia invaded Ukraine and war ensued. Overnight the global and domestic macroeconomic expectations upon which that entire South African fiscal framework was built ceased to exist.

Fast forward to February 25 2026. The finance minister delivers a milestone budget, declaring that the South African economy is finally turning the corner. He tables a budget framework projecting 1.6% growth, bolstered by recent data showing consumer inflation cooling to 3.5% and a slow uptick in the quarterly employment figure.

Just three days later, on February 28, a catastrophic conflict erupts in the Middle East involving the US, Israel and Iran, and potentially the region. By March 3, global oil prices violently spike from $65 to $80 a barrel and then above $100 within a week, threatening the immediate disruption of critical global supply chains.

Once again South Africa finds its freshly printed national budget anchored to a world that no longer exists. The critical question we must ask ourselves is: what have our fiscal and monetary authorities, as well as the legislative oversight authority, learnt from the 2022 shock?

The 2022 crisis

In 2022 the state was caught in a highly defensive fiscal posture. When global oil prices surged to $130 a barrel and the cost of imported wheat and fertiliser skyrocketed, imported inflation ravaged South African consumers.

The Reserve Bank responded with a prolonged cycle of aggressive interest rate hikes to fight mainly imported supply-side inflation. While the intention was to protect the currency, it choked domestic demand and in effect destroyed the 2.1% growth target.

Meanwhile, the Treasury’s rigid commitment to fiscal consolidation left the social wage highly exposed. Households bore the brunt of the cost-of-living crisis because the state lacked the fiscal agility to provide a comprehensive, real-time buffer against imported inflation.

A worse trajectory

The present Middle East conflict has the scale to be worse than the 2022 supply shock. The Strait of Hormuz and Middle Eastern energy networks are the arteries of the global economy. An extended disruption will not only erase the recent cooling of our domestic inflation but will heavily penalise our transport, manufacturing and agricultural sectors, among others. If we simply cross our fingers and hope the 2026 budget framework holds, we could be sleepwalking into a deep developmental deficit.

The severity of this threat is already echoing in the corridors of the legislature. During a media briefing in parliament on March 2 standing committee on finance chair Joe Maswanganyi frankly acknowledged that the conflict would be painful, warning that the intensification of hostilities and disruptions to global shipping arteries such as the Strait of Hormuz will have serious, direct implications for the national budget, industrial transport costs and household expenses.

Acknowledging the danger is the first step, but it must be followed by action. We cannot afford a repeat of 2022 where the defence of narrow debt-to-GDP targets superseded the defence of the economy. A sustained $80–$100 a barrel oil price would immediately raise fuel, food and transport costs for millions of South African households.

During a media briefing in parliament on March 2 standing committee on finance chair Joe Maswanganyi frankly acknowledged that the conflict would be painful, warning that the intensification of hostilities and disruptions to global shipping arteries such as the Strait of Hormuz will have serious, direct implications for the national budget, industrial transport costs and household expenses.

We must also recognise that we are entering this new crisis from an extremely fragile baseline. South African human developmental indicators are already critically low, leaving us with virtually no shock absorbers. The 2025 “Sustainable Development Goals Report” laid bare the stark reality of our stagnant progress, emphasising that despite recent macro-stability, systemic poverty, crippling unemployment and extreme inequality remain deeply entrenched.

Millions of households are entirely dependent on a stretched social wage just to survive. This grim socioeconomic reality is precisely why the state must exercise extreme caution and intervene decisively. Protecting society, the domestic economy and our long-term public finances requires a proactive, interventionist posture that shields our most vulnerable from external devastation, rather than abandoning them to the ravages of global supply chain disruptions.

Domestic resilience

To protect society from this coming storm both the fiscal and monetary authorities must immediately pivot to an offensive strategy aimed at building domestic resilience:

• The monetary authority. The Bank must exercise extreme caution. A knee-jerk return to high interest rates to combat an externally driven oil shock will immediately reverse the hard-won employment gains of the final quarter of 2025. Monetary policy must look through the temporary supply shock and avoid unnecessarily punishing the domestic consumer who is already running low on resilience.
• The fiscal authority. The finance minister must activate the state as an economic super actor. The R20bn-a-year Transformation Fund and the R940bn infrastructure pipeline cannot be delayed by bureaucratic red tape; they must be aggressively front-loaded to stimulate domestic activity. Furthermore, the state must implement sovereign derisking (using its balance sheet) to crowd in private capital to accelerate our transition away from imported fossil fuels towards domestic renewable energy and green manufacturing.
• Legislative intervention. Parliament and legislatures can no longer exercise tick-box oversight. We must urgently deploy a developmental oversight model. We need only look to the UK’s Office for Budget Responsibility, which on March 3 frankly acknowledged that its newly published spring forecasts may not be a true reflection of expected economic reality given the significant effect the Middle East war will have on the British economy, though the full trajectory remains unclear and highly volatile. Similarly, our legislatures must strengthen their oversight process, including tasking independent institutions such as the parliamentary budget office, or similar structures, to run real-time scenario modelling on the impact of $80 plus oil on our 3% medium-term development plan growth mandate. Any required shifts in the budget, whether expanding the social wage to protect vulnerable households or subsidising targeted productive sectors, must be based on this dynamic evidence, not obsolete February 2026 assumptions.

We cannot control the geopolitics, such as that of the Middle East, but we possess the absolute sovereign power to control our domestic resilience. The 2026 budget cannot be a static document; it must be transformed into an active, offensive shield. If we can learn anything from 2022 it is that stability is an illusion if the state is not prepared to intervene when the storm breaks.

• Jantjies, a former director of the parliamentary budget office, is a senior macroeconomic and fiscal analyst, professor of practice at the University of Johannesburg, and chair of the African Network of Parliamentary Budget Offices.