By Nco Dube | 22 October 2026

Finance Minister Enoch Godongwana had some genuinely encouraging news for South Africans yesterday. Government debt has finally stabilised, tax collections are performing better than anticipated and the budget deficit is narrowing. After years of watching public finances deteriorate under the weight of weak economic growth, unbridled corruption, mounting debt and repeated demands for bailouts, these are achievements worth acknowledging.

There is, however, another story buried in the same Medium-Term Budget Policy Statement. The economy is growing more slowly than Treasury expected just eight months ago, unemployment remains stubbornly high and the country’s public institutions continue to struggle to convert enormous financial allocations into functioning infrastructure and reliable services.

The numbers are improving. The lived experience of millions of South Africans tells a considerably less encouraging story.

This is not an argument that fiscal stability is unimportant. Quite the opposite. A government that cannot manage its finances eventually loses the ability to fund its developmental obligations. The more it borrows, the more it must spend servicing debt, leaving less money for education, healthcare, infrastructure and social protection. Countries do not become prosperous by accumulating debt they cannot sustainably finance.

But neither do they become prosperous simply by balancing their books.

That is the distinction we should insist on when examining Godongwana’s latest budget. Treasury is making progress in repairing the state’s financial position. What remains far less convincing is the ability of the broader government to translate that progress into a stronger economy and better lives.

A healthier fiscus, but where is the growth?

The minister reported that government debt stabilised at 78.4% of GDP in the 2025/26 financial year. The primary budget surplus, which means revenue exceeds expenditure before interest payments, is expected to strengthen further. The deficit for the current year has also been revised downwards, while gross tax revenue is now projected to exceed the February estimate by R17.1 billion.

These improvements have economic value. They can reduce borrowing pressures, support investor confidence and eventually release resources that would otherwise disappear into debt repayments. The proposed fiscal anchor legislation, intended to strengthen discipline and accountability over future budgets, is also a worthwhile development, provided it retains sufficient flexibility for changing economic conditions.

But we should be careful about confusing financial stabilisation with economic recovery.

Treasury has lowered its 2026 growth forecast from 1.6% to 1.2%. Even by 2029, the economy is projected to grow by only 2%. These are extraordinarily modest ambitions for a country confronting unemployment on South Africa’s scale. Statistics South Africa’s second-quarter figures recorded official unemployment of 33.6%, representing approximately 8.5 million people without work.

An economy expanding at these rates cannot reasonably be expected to absorb the millions already unemployed, let alone the young people entering the labour market every year. We can celebrate improved fiscal ratios, but those ratios offer little immediate comfort to somebody who has spent years looking for work.

There is another reason to temper the optimism around improved revenue. Treasury acknowledges that a substantial portion of the unexpected tax gains comes from higher commodity prices, particularly the performance of mining-related revenue. These gains may not endure. A favourable movement in international commodity markets is welcome, but it should not be mistaken for evidence that South Africa has suddenly developed a stronger and more diversified productive economy.

We have been here before. Commodity cycles improve revenues, fiscal pressures ease and government acquires some breathing space. Then prices turn, and the underlying weaknesses of the economy reassert themselves.

The real test is what we do with that breathing space.

We spend billions. What do we actually get?

Perhaps the most disturbing admission in yesterday’s statement concerned infrastructure spending.

Between the 2017/18 and 2023/24 financial years, national government transferred R887 billion through infrastructure conditional grants. That is an extraordinary amount of public money. Yet Treasury’s review found that, although most of the funds were spent, projects were frequently delayed, left incomplete or failed to deliver their intended benefits.

Think about what that means.

For years, government has reported infrastructure allocations and expenditure as evidence of its commitment to development. Yet its own review now confirms that spending the money has not necessarily produced the infrastructure communities were promised.

A budget can be fully spent while the intended public benefit remains undelivered. The accounting records may show expenditure, but the community is still waiting for a functioning water system, a completed road or a usable public facility.

This goes to the heart of South Africa’s governance crisis. We have become remarkably skilled at measuring inputs while paying insufficient attention to outcomes. Departments are judged by expenditure performance, institutions celebrate the allocation of additional resources, and politicians announce projects with considerable enthusiasm. Whether those projects are completed on time, work properly and deliver lasting economic value receives far less consistent scrutiny.

It is encouraging that Treasury now intends to reform infrastructure grants and strengthen accountability. The establishment of the Infrastructure Finance and Implementation Support Agency, together with efforts to improve project preparation and attract private investment, also offers potentially useful mechanisms for improving delivery.

But another institution, another funding mechanism or another infrastructure pipeline will achieve little if the fundamental weaknesses of project management, procurement, technical capacity and accountability remain unresolved.

The country does not need more impressive infrastructure announcements. It needs completed infrastructure that works.

The same contradiction appears in the R38.1 billion in additional medium-term savings identified by Treasury. Some of these involve reducing duplication, administrative inefficiencies and social grant fraud. These are sensible objectives, assuming the projected savings actually materialise.

But R7.8 billion is being reprioritised from the human settlements development grant because of poor programme performance, inefficiencies and rent-seeking.

There is something profoundly troubling about presenting this as a fiscal saving without confronting what it says about the state’s capacity to provide housing.

Of course, continuing to pour money into a dysfunctional programme would be irresponsible. Treasury is correct to intervene where public resources are being wasted. But the households awaiting government-supported housing have not suddenly disappeared because the programme cannot spend effectively.

The financial allocation may have been reduced. The social obligation remains.

That is the difference between repairing a budget and repairing government.

Fiscal discipline cannot substitute for a capable state

Godongwana’s statement also provides welcome recognition of the pressures facing households and frontline public services. The temporary fuel levy reductions will offer some relief from rising transport costs. Additional resources have been allocated to provincial health and education budgets, while municipalities will receive an additional R21.8 billion through the local government equitable share over the medium term.

There are also targeted allocations for child nutrition and measures to strengthen the response to gender-based violence, including funding for additional social workers. These are worthwhile interventions in a country where poverty, violence and unequal access to basic services remain deeply entrenched.

But the effectiveness of these commitments will depend on institutions beyond National Treasury.

A provincial education department that cannot fill teaching vacancies efficiently will not necessarily improve learning outcomes simply because additional money has been allocated. A municipality whose financial management is compromised by political interference will not automatically repair its water infrastructure because its equitable share has increased.

Treasury itself acknowledged the scale of the municipal problem, including widespread weaknesses in financial and operational performance. This is particularly relevant with local government elections approaching. Political parties will soon compete for control of municipalities whose financial and administrative difficulties cannot be resolved through campaign promises or coalition agreements alone.

The challenge is not simply that government lacks money. It is also that substantial portions of the public sector struggle to use the money they receive effectively.

This should complicate the increasingly predictable confrontation between those demanding greater public expenditure and those insisting on fiscal restraint.

South Africa needs both responsible spending and sufficient investment in its developmental obligations. Cutting budgets indiscriminately can weaken already struggling services, while increasing allocations without addressing institutional dysfunction can simply finance the continuation of failure.

Neither approach offers a credible development strategy on its own.

Treasury reports that approximately 60% of non-interest expenditure goes towards the social wage, including health, education, social development and basic services for poorer households. This is a substantial redistributive commitment and one that should not be casually dismissed.

But a social wage must ultimately be judged by the quality and reliability of what citizens receive, not merely the amount government allocates towards it.

There is little comfort in being told that public money has been allocated for water if your taps remain dry. Nor is an education budget necessarily delivering its intended value when learners attend schools without adequate teaching resources.

These are failures of public administration with profound economic consequences.

They weaken household welfare, increase the costs borne by businesses and deepen inequalities between those who can purchase alternatives and those who remain entirely dependent on public provision.

The uncomfortable truth is that wealthier South Africans can often insulate themselves from government failure. They buy backup electricity, water storage, private healthcare, security and alternative education. Poorer households cannot.

When the state fails to deliver, the burden falls most heavily on those who have the least capacity to escape its failures.

The real measure of economic progress

There is a temptation to treat yesterday’s budget as another contest between supporters of Treasury’s fiscal discipline and those who believe government should spend more aggressively to stimulate growth.

That is too narrow a debate.

South Africa’s economic challenges cannot be solved by fiscal policy alone. Sustainable growth requires private investment, functioning infrastructure, expanding productive capacity, an appropriately skilled workforce and institutions that administer public policy competently.

It also requires government to distinguish more carefully between spending that sustains an important social obligation and investment that expands the country’s future economic capacity. Both have a place, but neither can permanently compensate for the absence of growth.

The danger is that we become satisfied with the language of fiscal recovery while adjusting our expectations of economic progress downwards.

An economy forecast to grow by 2% in 2029 should provoke concern, not resignation. It means that even after years of structural reform, infrastructure commitments and promises of renewed investment, the official outlook remains far below what South Africa requires to make serious inroads into unemployment and poverty.

Godongwana should receive credit for improvements in fiscal management. Those gains are real and should be protected. But they cannot become a substitute for holding the rest of government accountable for the economic and social outcomes that fiscal stability is supposed to support.

The finance minister can create more room for investment. He cannot, through Treasury alone, ensure that municipalities function, schools teach effectively, infrastructure projects are completed or private businesses find sufficient reason to expand production and employ people.

That responsibility belongs to the government as a whole.

The achievement of the latest budget is that South Africa may be moving away from the immediate dangers of fiscal instability. Its weakness is that the path from healthier public finances to broader economic prosperity remains painfully uncertain.

We should acknowledge the former without pretending it resolves the latter.

A healthier budget is welcome. But South Africans cannot live on improved fiscal ratios. They need an economy that grows, creates work and a government capable of delivering what it has already paid for.