R45 billion win for South Africa
South Africa’s government has increased its expenditure for the remainder of the year by R45.5 billion, due to increased revenue.
In the Medium-Term Budget Policy Statement (MTBPS), Finance Minister Enoch Godongwana said government revenue had been higher than initially anticipated.
Godongwana said the revenue outlook had increased largely due to higher collections from corporate taxes, dividend tax and Value-Added Tax (VAT).
“Gross tax revenue for this year has been revised upwards by R17.1 billion compared with the February estimate.”
“A large portion of this improvement is due to higher commodity prices, and these gains are expected to dissipate over the medium term.”
This increased revenue has led the South African government to increase expenditure across several areas.
“The additional revenue in 2026/27 means that we can increase expenditure by R45.5 billion compared
to what we said in February,” Godongwana said.
These increases include:
- R6.2 billion for unforeseeable and unavoidable expenditure, mostly for disaster relief and rehabilitation.
- R1.9 billion rolled over from the previous financial year.
- R4.3 billion in self-financing expenditure.
- R823 million for the South African Defence Force for the deployment of troops to assist the police in fighting gang-related crimes and to combat illegal mining.
- R516 million for the Madlanga, Khampepe and Nkabinde commissions of inquiry.
Other expenditure adjustments were made to accelerate SARS’ modernisation programme and strengthen the Border Management Authority.
Godongwana also announced that South Africa’s contingency reserve had increased to R10 billion, to protect South Africa from weather-related concerns.
“The contingency reserve increases to R10 billion to respond to the potential threats associated with
the El Niño and other risks,” he said.
The in-year expenditure adjustments also allow for early retirement and voluntary exit packages for public service workers.
“This will rejuvenate the public service and save an average of R4.4 billion a year to address the pressures in the compensation of public sector employees,” Godongwana said.
Adjustments have also been announced for care services for retired South African military members.
“A Special Appropriation Bill includes allocations to Parliament and for the continued provision of health care services to retired members of the South African National Defence Force,” Godongwana said.
During his speech, Godongwana stressed that the R45.5 billion expenditure increase had come despite government losses resulting from the cut to the General Fuel Levy earlier this year.
This levy was reduced by R3 per litre earlier this year to protect consumers from sharp price hikes, which cost roughly R17 billion in lost tax revenue.
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