How South Africa's mini budget offers crucial relief for households
Finance Minister Enoch Godongwana’s Medium-Term Budget Policy Statement yesterday afternoon brought some rare good news for South Africans.
Image: Ai
Finance Minister Enoch Godongwana’s Medium-Term Budget Policy Statement (MTBPS) yesterday afternoon brought some rare good news for South Africans.
It offers potential relief for households while signalling a cautious path to fiscal stability.
Households could also see indirect benefits. The combination of lower inflation, a stronger rand, and fiscal discipline may ease the cost of living, economists noted.
Economists also said that expatriates working abroad will not be taxed on foreign pensions, adding further relief for some families.
One of the clearest wins for taxpayers is the chance of a smaller-than-expected tax hike.
Wichard Cilliers, head of market risk at TreasuryONE, says if SARS’ improved revenue collection continues, the planned R20 billion tax increase may no longer be needed, directly easing the burden on households.
Revenue collections have already exceeded expectations, with an upward revision of R19.3 billion for the current fiscal year, driven by stronger VAT, corporate tax, and fuel levy receipts.
Citadel chief economist Maarten Ackerman says “taxpayers might catch a break”.
Government underspending across departments has also narrowed the deficit, lowering debt-service costs and creating room to prioritise growth-enhancing spending, said Citadel.
Yet, Ackerman notes that underspending on services like policing and education is not ideal as it could result in higher expenditure in future budgets.
Infrastructure remains a priority.
Ackerman points to new solar, wind, and battery projects, improved port efficiency, and the creation of an Infrastructure Finance and Implementation Support Agency, expected by March 2026, to help attract private capital as being focus areas in the MTBPS.
“I consider that a very positive development indeed,” said Ackerman.
Anchor Capital economist Casey Sprake says the government’s new credit guarantee vehicle will “de-risk infrastructure projects and mobilise private capital for South Africa’s energy and climate goals”.
In cities, residents may notice the impact of municipal reforms. Stephen Whitcombe, MD of FIRZT Realty, highlights pilot programmes to professionalise water and electricity management, alongside R19.3 billion allocated to trading services reform in metros.
This enhances “the financial health of city utilities and reduce the incidence of billing disputes that have long frustrated property owners and investors,” he said.
Ackerman notes that, while challenges remain, including weak economic growth and state-owned entity vulnerabilities, the MTBPS strikes a constructive tone.
“This budget was not designed to excite the markets – it was designed to build confidence through credibility and fiscal stability,” said Ackerman.
Ackerman noted that “overall it was a constructive budget and probably the best one that the minister could deliver in terms of creating some economic breathing space and relief”.
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