MATTHEW MARRIAN | We’ve grown so used to bad news that we missed a good budget

Share current article via EmailShare current article via FacebookShare current article via TwitterShare current article via LinkedInMatthew MarrianEnter fullscreen mode displaying this image.ExpandThe finance minister and National Treasury did the hard, unglamorous work in the medium-term budget policy statement (MTBPS) and did it well, the author says, and that deserves to be said out loud. Picture: Kopano Tlape South Africans have become remarkably good at bad news, to the point where we expect our government to disappoint us and brace for it before every budget. When it disappoints as expected, we nod knowingly and move on.

The trouble with this habit is that it leaves us almost deaf to good news, and this week there was a great deal of good news worth hearing. So let me say it plainly: Wednesday’s medium-term budget policy statement was a good one, and the people responsible for it, from the finance minister to the officials at the National Treasury, deserve credit.

Think about what the Treasury was up against. Nobody planning the February budget predicted a war involving Iran, the closure of the Strait of Hormuz and an oil shock that pushed fuel prices sharply higher. The growth forecast for this year has since been cut to 1.2%.

Not long ago a shock like that would have blown the fiscal plan apart, and we would have spent the week reading about missed targets and rising debt. But this time the plan held.

Government debt stabilised at 78.4% of GDP in 2025/26, the first time in nearly two decades that it has stopped rising, and it is now expected to fall. The primary surplus, the amount by which revenue exceeds spending before interest costs, is set to grow from 1.7% of GDP this year to nearly 3% by 2030.

Over the past year all three major ratings agencies have taken positive action on South Africa, including Fitch’s first upgrade in almost 21 years, and government bond yields fell after the speech.

Had any of these gone the other way, they would have dominated the front pages for a week. But because they went the right way, they barely registered.

What impressed me most was how the Treasury handled its windfall. Revenue is running about R54bn ahead of February’s estimate, and the Treasury was honest that much of the improvement in tax collections comes from commodity prices, which are expected to fade. Estimates are that more than half of the overrun comes from receipts that are largely one-off.

Over the past year all three major ratings agencies have taken positive action on South Africa, including Fitch’s first upgrade in almost 21 years, and government bond yields fell after the speech.

Rather than treating that money as a permanent pay rise, the Treasury used a portion to contain debt costs, cut back its weekly bond auctions and introduce bond buybacks, while the buffers it had rebuilt left room for temporary fuel relief without abandoning the plan. Anyone who works with families on their finances knows how rare that kind of discipline is, in households and governments alike.

None of this makes the medium-term budget perfect, since spending rises by R45.5bn this year, a large share of future overruns is earmarked for infrastructure, some critics would have preferred more of the windfall to be held back in reserves or used to cut the deficit faster, and roughly one rand in every five of tax revenue still goes towards paying interest. Even so, holding the line through an oil shock, a growth downgrade and an election year is genuinely impressive.

There is a timely lesson here for the rest of us too, because bonuses and 13th cheques land in the next six weeks, and many of us will face the same question the Treasury has just answered: what to do with money we were not counting on.

Its answer is worth borrowing. Treat one-off money as exactly that rather than a raise, use some of it to reduce expensive debt, keep some back as a buffer, and be wary of spending that creates commitments long after the money itself has gone.

We are quick to hold the government to account when it gets things wrong, and we should be. But if we only ever speak up when things go badly, we should not be surprised when nobody believes they can go well.

This week the Treasury did the hard, unglamorous work and did it well, and that deserves to be said out loud.

• Marrian is director at independent wealth management firm InvestSense.

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