SA Medium-Term Budget: Economist Reveals What Treasury Must Fix as Economic Pressures Mount

South Africa is preparing for a crucial budget update as economists call on the National Treasury to strengthen public finances, protect economic growth and provide greater clarity on how the government plans to manage mounting financial pressures.

Dr Lerato Ntuli, an economist at Anchor Capital, has outlined a wish list for the 2026 Medium-Term Budget Policy Statement (MTBPS), which Finance Minister Enoch Godongwana is scheduled to present on Wednesday, 21 October.

Her recommendations come at a difficult time for the economy, with rising international oil prices, inflation concerns and weaker growth creating additional challenges for policymakers.

One of the key priorities is maintaining fiscal discipline. Ntuli argues that stronger-than-expected tax revenue should be used to improve the country’s financial position rather than create room for spending commitments that lack reliable funding.

Although government revenue has performed better than anticipated, she cautions that some of the improvement may be temporary. Meanwhile, spending pressures are building, particularly across national and provincial government departments.

The economist also wants Treasury to update its economic forecasts to reflect changing global conditions. The escalation of conflict in the Middle East has pushed energy prices higher, raising concerns about fuel costs, inflation and the pressure on households and businesses.

South Africa’s economic performance has also weakened. Official figures cited in the analysis show that gross domestic product contracted by 0.2% in the second quarter of 2026, highlighting the difficulty of sustaining economic expansion.

Another important recommendation concerns the government’s proposed fiscal anchor. Ntuli believes Treasury should explain how the framework will work in practice, including measurable targets, enforcement mechanisms and circumstances under which the rules could be suspended.

The proposed successor to the Social Relief of Distress grant is another issue requiring attention. With the existing grant scheduled to expire in March 2027, she argues that any replacement must have a clear funding plan. Where possible, support should also connect beneficiaries with employment opportunities, training and skills development.

Ntuli further calls for greater transparency regarding the financial risks associated with state-owned enterprises, including Transnet, Denel, SANRAL, the Land Bank and the Road Accident Fund. Clear information about their financial positions would help investors and taxpayers better understand potential demands on the public purse.

Infrastructure investment also features prominently in her recommendations. Improvements to rail networks, electricity markets, transport logistics and water infrastructure could support businesses, attract investment and improve the economy’s long-term productive capacity.

The economist additionally wants Treasury to clarify the affordability and funding arrangements for National Health Insurance, given continuing legal and implementation uncertainty.

With inflation risks increasing, budget decisions must also complement the South African Reserve Bank’s efforts to maintain price stability.

Ultimately, the upcoming budget statement will be an important test of government’s ability to balance immediate economic pressures with long-term financial sustainability. Ntuli’s central message is that credible planning, transparent spending and properly funded commitments are essential to strengthening confidence in South Africa’s economic future.

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