The Budget to be delivered by Finance Minister Enoch Gondongwana on February 25 must build on the reform gains South Africa has made and provide strong support to drive and accelerate reforms while also building on its trajectory of fiscal consolidation and discipline, says business organisation Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso.

South Africa's structural reform programme has the potential to deliver meaningful economic growth, as long as the country maintains the pace of reform implementation.

The economic benefits of the reforms will take a long time to materialise fully and this is important to convey to the public, particularly in the context of the widespread lack of job opportunities for the country’s youth.

“However, the structural reform programme has the potential to deliver economic growth that will make a meaningful difference to unemployment and raise standards of living, particularly when the municipal-level reforms start to materialise,” she says.

Additionally, development finance institution the International Monetary Fund's yearly consultations with South Africa indicated that the economy stands to gain up to 9% in real output over the medium term from reforms, although consensus forecasts indicate that GDP growth is still expected to be 1.8% in 2028.

“South Africa is in a better position today than it has been for a long time and the Budget must reflect that progress and credibly set out how we will build on it.

“By sticking to its fiscal discipline and pushing harder on the reform programme, government can set the foundations for a future cut in the value-added tax rate and other taxes, which would serve as a powerful trigger for economic growth,” Mavuso says.

The past three years of fiscal consolidation have been hard-won. It took painful decisions and discipline to reach the point where, for the first time since the 2008 financial crisis, public debt will not grow as a share of GDP, she points out.

The results are improved credit ratings, South Africa’s removal from the Financial Action Task Force grey list and a strong stock market performance, although geopolitical and trade tensions are also major contributors, she notes.

In 2025, there was a primary budget surplus of R68.5-billion, debt-service costs came in R4.8-billion below the Budget estimate and revenue exceeded expectations by R19.3-billion, which were significant achievements in a low-growth environment.

What BLSA wants from the Budget is confirmation that South Africa is holding to the fiscal framework. Additionally, it wants confirmation that the expenditure reviews Godongwana launched, which identified R37.5-billion in potential savings, will translate into real changes in the 2026 Medium-Term Expenditure Framework cycle.

The business organisation also wants to see underperforming programmes being closed, as he promised, Mavuso says.

Similarly, the Budget should send a clear signal on State-owned enterprises (SOEs) that there will be no further bailouts.

The fiscus cannot continue absorbing the losses of underperforming SOEs. A dispassionate assessment of each entity's return on investment, using proven tools to measure social impact where relevant, is long overdue, and some tough decisions must follow, Mavuso asserts.

TAX COMPETITIVENESS
“Business wants the Budget to send an unambiguous signal that the era of tax increases is behind us. National Treasury has previously floated the idea of reducing the corporate tax rate from 27% and, while fiscal constraints make that premature right now, it is the right long-term direction.

“Getting our tax competitiveness right, for businesses and consumers, is as important to the investment climate as reliable power and efficient logistics. If we stay on the current fiscal path, the space for tax relief will open and the Budget should articulate that vision,” says Mavuso.

Further, the water and sanitation crisis remains a critical problem. Analysis suggests the R156-billion allocated to water infrastructure falls well short of what is required to fix the country's deteriorating water systems.

“We encourage government to be honest about the gap and to actively develop mechanisms, including private sector participation, to close it.”

Further, the R15-billion infrastructure bond that was announced in the Medium-Term Budget Policy Statement in November was successfully launched, with funds for the Budget Facility for Infrastructure.

“The Budget could provide strong direction by allocating the balance to areas with the biggest impact. The public works programme has long been cited as a vehicle for youth employment and, with the infrastructure investment in focus, there is a genuine opportunity to create skills-building employment,” says Mavuso.