EDITORIAL | Does budget 2026 buy more than political breathing room?

The 2026 budget is a careful, staged truce between markets and voters. Finance minister Enoch Godongwana can claim a turning point, credibly so, as debt is stabilising and a primary surplus has been reached.

It’s hard to dispute the “turning point” narrative. For one thing, Godongwana is reporting a string of primary budget surpluses — projected to reach 2.3% of GDP within three years — a budget deficit narrowing from just more than 5% in the 2021/22 fiscal year to a forecasted 2.9% in three years, a slowdown for the first time in five years of growth in debt service costs and projecting debt-to-GDP ratio of 76.5% over the medium term.

All those are the exact metrics ratings agencies and bond investors closely watch when judging sovereign risk and, on paper and in the markets, they move South Africa in the right direction. Bond yields are falling, ratings agencies nod and Godongwana gets to claim he has turned the corner.

Still, the R30bn revenue overrun that made this possible is the budget’s inconvenient truth. Higher commodity prices, a stronger rand and lower inflation fattened the receipts. The Treasury then split the unexpected bonuses three ways. The almost R13.7bn in tax relief buys reprieve from bracket creep, the social relief of distress grant gets another year at R370 a month and R22.1bn is earmarked for infrastructure projects that, if delivered, could unclog the economy’s arteries. All sensible uses. All, crucially, one-off in spirit.

That is the political genus and the fiscal risk in one move. Using cyclical gains to fund what looks like recurring comfort converts a temporary fiscal windfall into recurring expectations. A one-off overrun can pay for a single year of relief or temporary top-up, but permanent bracket shifts, extended grants and new infrastructure programme raise the recurrent baseline. Once these commitments are in the system they recur long after the commodity cycle or the favourable financing window has passed.

South Africa’s track record on turning budget lines into functioning railways and efficient ports is, at best, aspirational. Money without managerial competence is just noise.

For starters, permanent spending without permanent revenue forces future budgets into a squeeze — cutbacks, tax hikes or more borrowing — any of which would erode the very stabilisation the budget claims.

Second, households treat grant extensions as entitlements, making reversals politically costly, more so in a country where three in 10 people are without a job.

Godongwana can and should point to a principle-based fiscal anchor. Naming targets is important, to be sure, but credibility will be earned in the follow-through.

The infrastructure spend is the budget’s moral high ground. Ploughing money into ports and rail is the right priority. If delivered, these projects could unclog the arteries of an economy that’s been gasping for air for more than a decade. But delivery is the rub. South Africa’s track record on turning budget lines into functioning railways and efficient ports is, at best, aspirational. Money without managerial competence is just noise.

So what did the finance minister really buy with the windfall? Time. Political breathing room. A narrative that says, “we fixed the worst of the fiscal rot, we’re easing the squeeze on ordinary people, and we’re investing in growth”. It’s a good story to tell at investor briefings and election campaigns ahead of the local government elections. The question is whether South African leaders will use this reprieve to rebuild the house or simply repaint the facade.