What to Expect from the Budget Tomorrow

Bheki Mahlobo told The Common Sense, “Overall, we expect the budget to continue along the same trajectory of the mini-budget last November that was very well received as a statement of confidence about South Africa’s economy.”

The 2025 mini-budget was celebrated by investors and ratings agencies alike and saw the country secure its first credit rating upgrade in 20 years.

According to Mahlobo:

“On growth, we expect the minister to announce numbers very near to a 1.2% GDP growth estimate for 2025, rising to 1.5% in 2026 and 1.8% in 2027.”

“On the deficit, we expect the minister to announce a deficit of near -4.7% of GDP for 2025, -3.8% for 2026, and -3.3% for 2027.”

“We do, however, expect the primary budget balance to reach close to 1.7% of GDP for 2026, making a fourth consecutive year of a primary budget surplus, and that this figure will rise to 2.1% in 2027 [the primary budget balance is the deficit before interest].”

“On debt, we expect the minister to announce debt-to-GDP figure of near 77.9% for 2025, 77.7% in 2026, and 77.4% in 2027.”

Those numbers align with consensus industry forecasts gathered by advisory firm Frans Cronje Private Clients, which project the 2026 growth rate at 1.4%, the deficit at -4.1% and government debt levels at 78.4%.

According to Mahlobo, the growth numbers, while up on 2025, remain very low by emerging market standards, and will only change if the government moves firmly towards reforms that cut taxes on capital, secure property rights, and prioritise private sector management of the economy.

Emerging markets will average growth rates between double and three times that of South Africa in 2026.

“South Africa needs many more businesses investing vastly more capital in pursuit of making a vastly greater amount of profit if it wishes to catch up,” said Mahlobo.

Read The Common Sense’s reporting on how the growth outlook may improve if Patrice Motsepe becomes leader of the African National Congress.

For the time being, however, those reforms will not be driven fast enough, which is something outside of the control of the finance minister.

What is within his control, Mahlobo emphasises, is managing the consequences of South Africa’s low rate of growth and here he and the Treasury have done very well in maintaining downward pressure on debt and the deficit and racking up four consecutive primary surpluses. That is likely to be well received by markets and the currency although it is already largely priced in, meaning that the announcements themselves will produce a fairly quiet and muted rand and bond market response.