Turning the corner: Will the 2026 Budget sustain reform momentum?

South Africa’s recent budget policy has marked pivotal steps towards fiscal stability and reform. Yet while progress in infrastructure, PPPs, and economic recovery is encouraging, significant challenges remain.

2026/27 National Budget Speech Predictions

The South African medium term budget policy was for many analysts a pleasant surprise^[1][2]. Following the turmoil surrounding the first ever postponement of the 2025 Budget Speech in the country’s democratic history^[3], the medium term budget policy statement (MTBPS) proved a milestone in a year marred by economic uncertainty^[4]. The impasse over the proposal to raise value added tax (VAT) – heavily opposed by many members of the newly established Government of National Unity (GNU) – is for the moment resolved. A lower inflation target was announced, a forward-thinking decision from the Ministry of Finance aimed at easing pressure on households and businesses. Meanwhile, a proposed additional expenditure of R15.8 billion is expected to facilitate funding for key priorities.

But even more heartening was a further evolution of the amendments to public-private partnerships (PPP) regulations to unlock clearer, more efficient processes – with municipal PPP regulations also set to be amended this year.

These priorities align with the priorities outlined by the GNU during the 2025 State of the Nation Address^[5], where President Cyril Ramaphosa announced a R940 billion spend on infrastructure over the next three years and a priority to unlock private sector expertise and funds through PPPs. Given the importance of infrastructure development for poverty alleviation and economic development, Finance Minister Enoch Godongwana’s National Budget Speech for 2026 must maintain this momentum. However, it is essential that government be held accountable in delivering on these promises.

Between the 2025 national budget and MTBPS, numerous initiatives were placed in the spotlight, more specifically Operation Vulindlela, an initiative of the Presidency and National Treasury to accelerate the implementation of structural reforms and support economic recovery in multiple key sectors. The energy and logistics sectors have seen some of the biggest wins, rebounding due to the concerted PPP efforts.

Transnet’s rail network is now open to private operators under the Freight Logistics Roadmap. Meanwhile, projects for over 2,000 MW of new electricity capacity have been registered, as Eskom returns to profitability.

These are important success stories, but there are still serious concerns arising around some of the country’s key infrastructure – neglected, despite being integral to the lives of its citizens. Water infrastructure has long been a concern, but analystswarn that South Africa is entering a dangerous phase where chronic underinvestment, collapsing wastewater plants, leaks, and failing oversight could trigger water delivery failure across cities and industries. In the MTBPS, the minister acknowledged that water security remains a key priority, with the launch of the National Water Resources Infrastructure Agency set to launch in 2026.

Meanwhile, despite no direct mention in the MTBPS of the loss of almost $440 million in aid from the United States for HIV/Aids relief last year, the conversations around foreign funding continue. As the South African Institute of Taxation said in its 2026 outlook: “reliance on foreign aid is a vulnerability we can no longer afford to ignore”^[6].

Whether or not the minister will address this exact concern is unclear, but his plan will have to allude to the possibility of building domestic systems that are less swayed by the policy shifts of international superpowers.

Similarly, the tariff conversation is far from over, with 30% tariffs on South African exports to the United States still in effect. One of our largest export markets to the US, the automotive sector, saw demand drop 82.2% year-on-year in the first half of 2025. South African Revenue Service data over the same period shows demand for vehicles and accessories are also down 45%. The minister will have to address this in his budget by balancing the need for protectionist measures to support local industries against the need to manage rising import costs and inflation. Other trade partners may need to be considered, an option bolstered by South Africa’s recent removal from the Financial Action Task Force (FATF) grey list. With South Africa now viewed as a lower-risk jurisdiction again, this restored trust can lead to renewed trade and capital flows. However, government was quick to note that the removal from the list is the first step of many^[7] in South Africa’s financial transformation journey – as we aim to improve governance and law enforcement processes.

In summation, South Africa’s recent budget policy has marked pivotal steps towards fiscal stability and reform. Yet while progress in infrastructure, PPPs, and economic recovery is encouraging, significant challenges remain. The coming year will test the government’s resolve, a resolve we hope will be reflected in the 2026 Budget Speech.