The week ahead: Budget in the spotlight

It’s a busy, politically loaded week in South Africa, but everything revolves around Wednesday, when finance minister Enoch Godongwana delivers the national budget in Parliament. After last year’s VAT fight tested the government of national unity (GNU), the expectation is a steadier speech: credible debt maths, limited room for tax relief, and a clearer read on whether reforms promised by Cyril Ramaphosa translate into practical steps on energy and logistics.

Here’s what else to expect in the days ahead.

Politics

2026 budget

Godongwana will deliver the 2026/27 budget speech to parliament on Wednesday. He will set out the government’s fiscal policy and economic agenda for the year ahead, including any potential tax changes. Last year, proposed VAT changes set off an impasse with the DA that threatened the GNU. This year, it’s likely that Godongwana and the ANC have learnt the lessons of 2025 and will deliver a speech that their coalition partners can support. Critical to watch will be whether the reforms signalled by Ramaphosa in his state of the nation address – especially on energy and logistics – carry through into the practical steps outlined in the budget.

State of the provinces

Gauteng premier Panyaza Lesufi will deliver his state of the province address (SOPA) on Monday. The minority government of provincial unity (GPU) that Lesufi leads is under pressure following the EFF’s decision to withdraw from working with the ANC in Gauteng. This has serious implications for the passing of the Gauteng budget this year, which the EFF has supported in the past.

Western Cape premier Alan Winde will deliver his SOPA on Wednesday, while the Eastern Cape, North West and Northern Cape will have their SOPAs on Thursday. KZN follows on Friday.

By-elections

Three by-elections will be contested on Wednesday. In Johannesburg, the DA will be defending Ward 102, which the party retained with an overwhelming 94% in a low-turnout by-election in August 2023. The DA’s main opponents in the ward will be the ANC and MK, which won 11% and 4%, respectively, in the 2024 provincial elections. In those elections, the DA recorded 56% of the vote in the ward.

In Nongoma, KwaZulu-Natal, the National Freedom Party (NFP) will defend Ward 17 in a highly competitive by-election featuring the IFP, MK, ANC and EFF. While the NFP narrowly retained this ward in a February 2022 by-election, winning 45% to the IFP’s 41%, it slipped below both the IFP and MK in the 2024 provincial election, mustering 18% to the IFP’s 44% and MK’s 26%. This will be a big target for the IFP, which lost control of the municipality in February 2022 after losing a ward to the NFP.

In Polokwane, Limpopo, the ANC will be defending Ward 34. Its main challenger will be the EFF, but other competitors include the SACP and UDM. In 2021, the ANC comfortably won the ward with 81% to the EFF’s 14%. In the 2024 provincial election, the ANC won 77% to the EFF’s 15%.

Municipal adjustment budgets

Municipal councils will be voting on their adjustment budgets in this week’s council meetings, as the Municipal Finance Management Act requires budgets to be passed by the end of February. This may be a struggle in many Gauteng municipalities after the EFF’s withdrawal from ANC-led coalitions last week.

Economics

Godongwana is set to table the national budget against a relatively favourable macroeconomic backdrop. The readout is not expected to show significant changes to the National Treasury’s economic assumptions, which appear realistic and point to moderately faster growth over the next three years. Forecasts will likely continue to hinge on stronger consumer spending, supported by a gradual upturn in fixed investment and faster growth in government spending. The upside will remain capped by net exports, as exports face pressure from high US tariffs and shifting global supply chains.

Firmer domestic demand and higher export earnings from surging metal prices have likely boosted tax collections, with gross tax revenue over the fiscal year to date running ahead of November’s medium-term budget policy statement estimates. Personal taxes were up 7.2% from April to December, while corporate taxes rose 10.3%, lifting overall collections by 8.6% – better than the Treasury’s 8.1% forecast for the full year. The windfall gives Godongwana room to offer consumers more relief than in recent years, though no new tax measures are expected.

On the spending side, measures to contain expenditure growth will remain focused on restraining the public sector wage bill, while debt-service costs should rise at a slower pace due to a narrower deficit and falling borrowing costs. The focus will be on whether Treasury confirms that debt will peak in the current fiscal year and outlines a credible path to bringing the deficit below 3% of GDP by 2029, as well as on any details regarding the long-awaited fiscal rule framework.

This article is published courtesy of The South Africa Brief, a political newsletter published on Substack which is a collaboration between Paul Berkowitz and Jonathan Moakes. It provides analysis and insight into the new, uncertain era of South African politics heralded by the 2024 general election. Including a specific focus on municipal politics, it will provide full analysis in the run-up to this year’s municipal polls. 

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