The purpose of this briefing note is to provide SEIFSA members with a focused assessment of Budget 2026, concentrating on those elements most relevant to the metals and engineering sector. Rather than restating broad macroeconomic commentary available elsewhere, this note interprets the Budget through an industry lens.

OVERARCHING
·The first and most important observation is that the macroeconomic “green shoots” that SEIFSA has consistently referenced are now clearly visible. Budget 2026 confirms that fiscal stabilisation is no longer theoretical — it is evident in the data.

·Public debt has stabilised, fiscal metrics have improved, sovereign credibility has strengthened, and South Africa has secured both removal from the FATF grey list and a credit rating upgrade.

·Borrowing costs have eased and investor confidence has improved. Collectively, these developments signal restored macro credibility.

·However, SEIFSA has consistently maintained that stabilisation is a necessary foundation — not the end objective. The decisive next step is to convert these credibility gains into sustained investment momentum and improved order book quality for companies in the metals and engineering sector.

·The improved fiscal matrix has yielded a tangible dividend:

o    The withdrawal of the previously proposed additional R20 billion in tax measures reflects a strengthening revenue position and disciplined fiscal management.

o    Personal income tax bracket adjustments in line with inflation,

o    the increase in the VAT registration threshold from R1 million to R2.3 million, and

o    enhanced capital gains tax exemptions for small business disposals represent measured economic support.

·This Budget reinforces a critical principle: fiscal discipline, while often difficult, ultimately creates the space for pro-growth flexibility.

·At the same time, structural expenditure pressures remain significant, with the majority of spending still directed toward the social wage.

M&E SECTOR – KEY PROPOSALS
 
Budget 2026 reflects continued momentum in the infrastructure reform architecture, which remains central to industrial demand;

·Progress is being made on the Credit Guarantee Vehicle to de-risk infrastructure projects, with operationalisation anticipated within the year. This is a material step toward unlocking investment and crowding in private capital.

·The Budget Facility for Infrastructure now has 63 projects under consideration, ranging from social infrastructure to large-scale strategic projects.

·The issuance of an infrastructure bond, which raised R11.8 billion last year, demonstrates growing sophistication in infrastructure financing mechanisms.

·Treasury has prudently taken advantage of improved investor appetite by increasing issuance. This confidence dividend must, however, be carefully managed to ensure that confidence-driven borrowing does not undermine the hard-won debt stabilisation trajectory.

CONCERNS;

·A notable concern is the absence of a structured update on the finalisation of Public Procurement Act regulations. While amendments are referenced in supporting documentation, there is no clear sequencing, timeline or implementation commitment.

·This omission is material. Public procurement is the primary interface between state infrastructure expenditure and domestic industry. Regulatory certainty is fundamental to localisation frameworks, designation enforcement and long-term capital allocation decisions in manufacturing. Infrastructure reform without procurement clarity weakens the industrial multiplier.

·From SEIFSA’s perspective, this remains an area requiring urgent policy clarity and decisive communication.

CONCLUSION
 
Budget 2026 confirms that South Africa’s macroeconomic foundation is materially stronger than in recent years. Fiscal consolidation has yielded measurable dividends, and the infrastructure financing architecture is improving.
 
For the metals and engineering sector, the priority now is execution. The opportunity lies in converting macro credibility into industrial opportunity through disciplined infrastructure delivery, procurement certainty and sustained structural reform.
 
SEIFSA will continue to engage constructively to ensure that this moment of stabilisation translates into durable industrial growth.