A Few Fiscal Rays of Hope Do Not Mean South Africa Is Enjoying Economic Summer Just Yet

Minister Enoch Godongwana’s 2026 Budget offers a mixture of relief and optimism, but it remains within a framework of poor policy directions and inadequate service delivery.

With the constraints of damaging policy such as Black Economic Empowerment (BEE) and Affirmative Action (AA) still firmly in place, the economy is growing too slowly to achieve rapid recovery – with an estimated growth rate of 1,6% this year compared to 1,2% in 2025.

South Africa is in a better fiscal position than in recent years, though, thanks to increased revenue. Nevertheless, the consolidated budget deficit remains a problem.

Financing historical state debt remains high and, although there is currently a primary budget surplus, loans are needed to make up the deficit created by debt-financing costs.

The situation at local government level remains a major concern. Corruption, poor decisions and maladministration at this level could play a significant role in counteracting the possibility of growth.

Still, the Freedom Front Plus (VF Plus) rejoices with every ordinary, hard-working taxpayer – especially the middle-income group – about the much-needed tax relief announced by the Minister.

Personal income tax brackets have been fully adjusted for inflation after two years. This means R13,7 billion more in the pockets of ordinary taxpayers, which will give the economy a boost.

Other important announcements include the cancellation of R20 billion in planned tax increases – largely due to higher revenue from VAT and company tax.

This shows that the Minister looked for ways to accommodate ordinary taxpayers. It is a good sign and should be welcomed.

There is a stimulus for small business development with the compulsory VAT registration threshold increasing from R1 million to R2,3 million and the capital gains tax exemption for business sellers rising to R2,7 million.

Overall, South Africa finds itself in a more stable fiscal position than in recent years, especially with the budget deficit narrowing to 4,5% of GDP.

In the Freedom Front Plus’s view, this is a step forward, but it is still not enough. The party welcomes the relief and focus on growth, but the burden of social grants and a public wage bill that consumes around 35% of state revenue remains unsustainable.

Municipalities continue to collapse due to incompetent cadre appointments and financial lifelines for state-owned entities, such as Transnet, waste billions.

The only way to bring about real change and achieve growth exceeding 3% is through major cutbacks in wasteful expenditure, merit-based appointments and greater market freedom.

Without it, genuine growth will simply not materialise and taxpayers will remain overburdened.

The Freedom Front Plus, therefore, demands urgent reforms for a competent, efficient state. The few fiscal rays of hope demonstrate what the country is capable of.

FF+ Manifesto on Immigration: Implementing a fair and effective immigration system.

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