Financeupdated 1h ago2 min read
Enoch Godongwana Cuts South Africa Fuel Levies, Lowers 2026 Growth Forecast To 1.2%
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2026 growth forecast reduced to 1.2% in the MTBPS. Temporary fuel levy cuts totalling about R10 billion start November 4.
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“The temporary levy reductions will provide some breathing space for motorists and businesses that depend on vehicles for their livelihoods,”
Reuters“The Treasury said plans to introduce a principles-based fiscal anchor law in 2027 would strengthen the foundations for future growth.”
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Fuel relief and growth cut
South Africa cut its 2026 economic growth forecast to 1.2% and announced temporary fuel levy cuts in the Medium-Term Budget Policy Statement delivered by Finance Minister Enoch Godongwana in Cape Town.
Godongwana said the government would reduce the fuel levy by 3 rand per litre for diesel and 1.50 rand per litre for petrol from Nov. 4 to Dec. 1, followed by smaller reductions until Jan. 5, 2027.
The government said the measures would provide 10 billion rand in support at a fiscal cost of 10 billion rand in foregone revenue, with the 10 billion rand previously transferred to the Central Energy Fund to be returned to the National Revenue Fund.
Godongwana framed the move as a 10 billion rand effort to ease cost-of-living pressures, with the levy reduced by 3 rand a litre on diesel and 1.50 rand on petrol from November 4 to December 1 and smaller reductions of 1.50 rand and 1 rand respectively remaining in place until January 5.
The MTBPS also projected South Africa’s consolidated budget deficit at 3.9% of gross domestic product in the current fiscal year, down from the 4% forecast in February.
Debt stabilises, revenue rises
Godongwana told Parliament that for the first time in nearly two decades, South Africa’s debt-to-GDP ratio stabilized at 78.4% in the 2025/26 fiscal year. The government said gross tax revenue for 2026/27 was revised upward by 17.1 billion rand from the February estimate, driven by higher collections from corporate tax, dividends tax and value-added tax. The budget deficit was projected at 3.9% of gross domestic product in 2026/27, improving to 2.5% by 2030, and gross tax revenue was revised upwards by approximately $1.03 billion.
The Treasury reported a 54.1 billion rand revenue overrun and said the additional funds would be used to support infrastructure projects, ease spending pressures, increase reserves and pay down debt. Godongwana said the government had “rebuilt fiscal buffers,” and he argued that this left it in a stronger position to respond, including by providing temporary fuel levy relief again.
Spending priorities and risks
The MTBPS said the government would continue prioritizing structural reforms, stronger state capacity and growth-enhancing infrastructure investment to support faster and more inclusive economic growth. The budget provided additional funding for municipalities and provincial services, including R21.8 billion for the local government equitable share and R20.5 billion for the provincial equitable share. The budget targeted child nutrition, public safety and gender-based violence, including R3.8 billion to recruit more than 3,500 social workers.
The statement set out a fiscal anchor written into law, and it described a debt trajectory where the debt-to-GDP ratio held at 78.4% in 2025/26 and was projected to fall to 76.6% by 2030 and 66.6% by 2035. Treasury warned that some revenue gains would not last, and it quoted Standard Bank’s Dr Elna Moolman saying the treasury’s focus was shifting towards growth after years spent restoring fiscal credibility and stabilising debt.