Major Budget changes announced – Budget Speech 2026
- Dylan Naidoo
- 5 hours ago
- 3 min read
By: Dylan Naidoo
On 25 February 2026, the National Treasury broadcasted the national budget speech. It was hosted in Cape Town and announced by Finance Minister Enoch Godongwana.
Introduction of the Speech
During the introduction, one of the first aspects mentioned was that, after 17 years, the national debt has begun to stabilise, with debt service cost also falling. This announcement was great news to hear, considering six years ago South Africa was downgraded to junk status by major credit agencies. As such, major milestones have been met:
South Africa has been removed from the Financial Action Task Force (FATF) grey list
South Africa receives its first credit rating upgrade since the last 16 years
Borrowing costs have been reduced
Domestic Outlook
A projected 1.6% economic growth in 2026, an improvement over 2025
Economic growth is expected to reach 2% by 2028
Minister Enoch Godongwana notes several challenges, including logistics bottleneck, weak infrastructure and the Foot and Mouth Disease (FMD)
The Fiscal Strategy
The new fiscal strategy encompasses four major features: Accelerating public investment; enhancing public spending efficiency; improving spending composition whilst increasing capital investment; and sustaining public finances. This strategy is expected to achieve great results, including reducing the gross debt.
Economic Information for 2026
The Gross tax revenue is revised up by R21.3 billion compared to the 2025 Budget estimate.
The government has withdrawn R20 billion in tax increases provisionally included in the May 2025 Budget.
The tax-free annual investment limit will increase to R46,000 per year.
The limit to retirement fund deductions will be raised to R430,000.
The VAT registration threshold for small business has been increased to R2.3 million and applies to small businesses worth R15 million.
Tobacco: Excise duties on tobacco will be increased in line with inflation. This includes: 20-pack of cigarettes rises to R23,58; Pipe tobacco rises by 28 cents per 25 grams; and cigarette tobacco by 87 cents per 50 grams.
Alcohol: Alcohol beverages will also rise due to inflation, which includes: A 340 millilitre can of beer or cider increases by 8 cents.; a 750-millilitre bottle of wine goes up by 15 cents; a 750-millilitre bottle of spirits will increase by R3.20.
Fuel Levy: Fuel levies will also increase due to inflation, which includes: The general fuel levy increases to 9 cents per litre for petrol and 8 cents per litre for diesel; the carbon fuel levy increases to 5 cents per litre for petrol and 6 cents for diesel; and The Road Accident Fund levy increases by 7 cents per litre.
Infrastructure: In the medium term, public spending on infrastructure will exceed R1 trillion. This is split accordingly: R577.4 billion is spent by state-owned companies and entities; R217.8 billion spent by provinces and R205.7 billion spent by municipalities. The Budget Facility for Infrastructure (BFI) has approved R21.9 billion on five major projects.
Special Appropriation Bill: The introduction of the special appropriation bill includes the following: R5.8 billion for PRASA’s rolling stock fleet renewal programme; R1 billion for South Africa’s share subscription to the international
The National Treasury is easing restrictions on the cross-border flows of capital.
More Budget Information
The Public Network Grant has been decreased by “about R8.4 billion” over the next three years.
R8.5 billion has been added to the contingency reserve.
Crypto assets are now governed under the cross-border movement of capital framework.
R700 million for the Department of Communications and Digital Technology
Budget Allocation
48.9% (R951.7 billion) of nationally raised revenue to be allocated to the government, along with 41,7% (R810.5 billion) allocated to provinces and 9.4% (R182,3 billion) allocated to local government.
R342 million to the provincial equitable share of Grade R teacher’s salary
R340 million for the early retirement or voluntary exit programme
R319 million for the presidential employment initiative
R1.5 billion to the provincial roads’ maintenance grant in 2026/27
Basic education receives R22.7 billion for carry-through costs; R9.9 billion in employee compensation; Early childhood development grant to gain an additional R12.8 billion over the next three years; the increased per child, per-day subsidy of R24
R26 billion towards the HIV/AIDS programme
R21.3 billion towards the health sector over a medium term
R86.9 billion to support the provision of free basic services
R27,7 billion towards performance-based reform of the metro trading services including water, electricity, sanitation and solid waste
Minister Enoch Godongwana ended his speech by thanking the members of the house and is hopeful for the future of the South African economy.
You can access the full transcript of the speech here.
