MTBPS 2026 | Land Bank’s guarantee prayers answered with R10bn

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Opens in new windowOpens in new windowOpens in new windowOpens in new windowOpens in new windowOpens in new windowEnter fullscreen mode displaying this image.ExpandFinance minister Enoch Godongwana delivering the 2026 medium-term budget policy statement. Picture: GCIS Story audio is generated using AI

It took months of the Land and Agricultural Development Bank South Africa pleading its case for breathing room to borrow more easily, but finance minister Enoch Godongwana has finally relented on the troubled bank’s calls for help.

The minister’s 2026 medium-term budget policy statement (MTBPS) announced a new R10bn guarantee for the Land Bank to allow it to raise funding and honour debt obligations that fall due in early 2028.

He tabled the MTBPS in a joint sitting of parliament on Wednesday afternoon.

The MTBPS said the government’s contingent liabilities and other obligations are guarantees that may result in future claims on the national budget. Government’s guarantee portfolio decreased from R982.4bn in March 2026 to R960.6bn in June 2026.

“The Land Bank’s financial position has improved following the conclusion of its debt restructuring in September 2024. The bank has reduced its outstanding debt from R40bn in March 2020 to R6.9bn in March 2026.

“However, investor confidence in the bank remains weak, and it has limited access to funding. This constrains its ability to deliver on its core agricultural lending mandate. The government has provided a R10bn guarantee, which will enable the Land Bank to raise funding to meet its debt obligations falling due in March 2028 and grant new loans.”

Earlier this year, Land Bank acting CEO Jabu Mphambo told Parliament that the bank has borrowed under strict conditions and short repayment tenures to finance a sector where loan tenures are typically long-term, increasing pressure on the bank itself.

The MTBPS said the government and the Land Bank are working to strengthen the bank’s funding arrangements and restore sustainable agricultural lending, while limiting the risk of renewed liquidity pressures and further calls on government support.

Aside from a new guarantee from the Land Bank, the MTBPS announced R2.2bn for the Ithala Development Finance Corporation, as well as additional guarantees to the South African National Roads Agency Limited.

The MTBPS said Denel continues to experience liquidity constraints and remains reliant on fiscal support, as the government guarantees of R660m and $14m have been provided to support the execution of secured contracts.

“The principal fiscal risk remains Denel’s ability to stabilise its operations and generate sufficient cash flows without further government support. Fiscal exposure to South African Airways increased during 2026 following pressure on its operations and finances from the fuel price shock.”

The MTBPS said the government provided a R1bn guarantee in August 2026 to support working capital requirements for the national carrier, which also has about R223m in government guarantees related to unflown-ticket liabilities and letters of credit.

“The residual risk depends on its ability to absorb these pressures and meet its operating and financing requirements without additional government support.”

Regarding Eskom and Transnet, the MTBPS said Transnet remains a material medium-term fiscal exposure because of its weak financial position, while Eskom’s risk to the fiscus has eased due to improvements in operational and financial performance and the government’s debt-relief arrangement.

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