BUSINESS NEWS - The 2026 National Budget Speech, delivered by Finance Minister Enoch Godongwana on 25 February, marks a significant departure from the reactive policy-making of recent years.
According to Hugh Hacking, Head of Structured Investments and Annuities at Momentum Corporate, this year’s budget revealed a shift from managing decline toward active growth, discipline, and long-term resilience.
"This is probably the best budget speech we have seen in many years. It lived up to expectations and, in several key areas, actually exceeded them," says Hacking.
Restoring investor confidence through discipline
National Treasury projects real economic growth of 1.6% in 2026, an improvement from the 1.4% estimated in 2025. The budget deficit has narrowed to 4.5% of GDP for 2025/2026, an improvement from the 4.8% estimated in the 2025 budget.
Debt has stabilised at 78.9% of GDP and is expected to reduce to 77.3% of GDP in 2026/2027, 76.5% by 2028/2029 and under 70% by 2033.
Godongwana announced that the fiscus has reached a primary surplus of 0.9% of GDP for the 2025/26 period, meaning tax collections now exceed government expenditure when debt servicing is excluded. This structural turnaround is central to the country's improving credit outlook.
"The fact that a core surplus is running is critical," Hacking explains. "It bodes well for potential further upgrades in our credit rating and indirectly reduces the cost of debt servicing. More importantly, it means the government is not financing its daily operations using debt. There is a clear distinction between 'good debt' and 'bad debt' - while you might issue debt for infrastructure, using it for operations is like buying groceries on credit. Seeing the government move away from that is a very positive story."
Relief for households and small businesses
In a surprising move, the government scrapped previously touted tax increases and instead focused on relief. This included inflation-linked adjustments to personal income tax brackets and an increase in savings incentives.
The annual tax-free savings limit has been raised to R46,000 (up from R36,000), while the retirement fund contribution deduction limit has been increased to R430,000 (up from R350,000).
Hacking says these shifts are essential for the national savings ecosystem: "These dispensations are a very positive story that should incentivise longer-term saving in South Africa at a time when households are under significant pressure."
Small businesses also received a boost with the VAT registration threshold doubling to R2.3 million in annual turnover, up from R1 million. "Adjusting the compulsory VAT registration threshold should be well received by small businesses as it provides significant administrative relief to the engine of our job market," says Hacking.
Strategic infrastructure and structural reform
The budget committed over R1 trillion to growth-enhancing infrastructure over the medium term, including PRASA rolling stock, water security, the unbundling of Eskom and improving operations at Transnet.
"What we have seen is a great deal of discipline and restraint," says Hacking. "Even in the absence of a formal fiscal anchor - which can sometimes lead to the gridlock we see in markets like the US - the level of management and the commitment to infrastructure over operational spending will generate a great deal of confidence."
A vision for the future
From the centralisation of unclaimed benefits to the relaxation of regulations for onshore investment managers and governance of crypto assets across borders, the 2026 Budget aims to position South Africa as a premier investment hub for the continent.
"Overarching everything is a really positive narrative," Hacking concludes. "The budget moves us toward a proactive path of opportunity, providing the stable platform required to collectively build a more resilient South Africa.”
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