R45 billion more to spend, and the R38 billion savings come out of the grants and programmes you use
The Medium-Term Budget Policy Statement holds debt at 78.4% of GDP and finds extra money from gold and platinum, but households and municipalities are told to expect more conditions and less waste.
National Treasury has held the government’s debt at 78.4% of GDP and found R45 billion of additional spending for the current year, director-general Duncan Pieterse set out in the Medium-Term Budget Policy Statement presented on Wednesday.
The debt ratio stabilised slightly lower than Treasury projected three years ago, when it said it would stop the climb in the 2025/26 financial year. Treasury has now run growing primary surpluses, where revenue exceeds spending before interest, for three consecutive years, and expects to continue that trend over the next three years.
That is the headline number, and it is a real one. It was achieved in a year Pieterse describes as turbulent, with the Middle East conflict that began in February and the global oil price shock that followed. Growth is now expected at 1.2% this year, down from the 1.6% forecast in February but up on last year’s 1.1%. Emerging market economies are expected to grow 0.8 percentage points slower than last year, so South Africa is holding its line in a weak neighbourhood.
The money for the extra spending comes largely from the ground. Revenue is expected well above budget, helped by high gold and platinum prices, which produced a R23.9 billion overrun in gross tax and mining-related revenues.
Of the R45 billion, R20 billion is set aside for critical infrastructure. Some of the extra revenue goes to further temporary relief from the fuel levy, cushioning households and businesses from high global oil prices, and some to drought relief. Spending grows 3.6% over the medium term to more than R3 trillion in 2029/30, while capital spending grows faster at 5.3% a year.
For households, the line items that will be felt are the 3 500 additional social workers to support victims of violence against women, frontline health and education posts in the provinces, and support for municipalities to meet the cost of free basic services such as electricity and water. This year’s allocation also funds further modernisation of the SA Revenue Service to lower the cost of tax compliance, and improved capacity at the Border Management Authority to secure the borders.
The harder message sits underneath the spending. Pieterse is blunt that South Africa is not yet getting full value from all of it, and that meeting the fiscal targets means doing more with less. Treasury has identified R38.1 billion in savings, over and above last year’s R12 billion, by closing programmes it judges not fit for purpose, cutting administrative expenses and duplication, and reducing fraud in social grants.
For residents of the municipalities where water, electricity and sanitation have failed, the statement offers money and a warning in the same breath. Direct allocations to local government have reached just over 10% of available spending for the first time in an MTBPS. Pieterse’s line is that they have the funding and now must deliver. Treasury is attaching more conditions to that funding, intervening where it finds non-compliance and mismanagement, and proposing amendments to municipal finance legislation to require funded budgets, allow earlier intervention in financial distress, and give treasuries a role in appointing chief financial officers.
The statement also reaches back. Between 2009 and 2023 public debt tripled and interest payments consumed a growing share of public resources, and Treasury wants to write fiscal discipline into law, with legislation to be tabled in 2027, to guard against a return to that period.
Pieterse is director-general of the National Treasury, and the statement he set out was presented on Wednesday. Sunday World published an account of it on 2026-10-25 under the heading that the country’s debt had stabilised as Treasury ramped up infrastructure investment, and on the figures above that account is accurate. What a South African reader needs alongside it is the trade: the R45 billion is real, the R20 billion for infrastructure is real, and so is the R38.1 billion in cuts, the closures of programmes judged unfit, and the new conditions on the money that reaches councils.
The Enquirer will keep reporting the MTBPS line by line as the allocations reach provinces and municipalities, and will follow the 2027 fiscal discipline legislation when it is tabled.
