Sim Tshabalala: Group Chief Executive Officer, Standard Bank,
Fifi Peters: Financial Journalist and Broadcaster,
Zen Dlamini: Global Head of Public Sector and Infrastructure, Standard Bank Corporate and Investment Banking,
Honourable Finance Minister, Enoch Godongwana, Deputy Minister of Finance, Ashor Sarupen,
Luvuyo Masinda: CIB Chief Executive, Standard Bank
Finance Minister Enoch Godongwana used Standard Bank’s annual post Budget forum in Rosebank not simply to defend a projection but to define the test that now follows it.
A week after tabling the 2026 Budget in Parliament he stood before bankers investors and corporate executives to argue that South Africa has reached an inflection point. Treasury projects that debt to GDP has peaked. From here it begins a gradual decline.
The claim is significant. It signals the end of acceleration in the debt ratio after more than a decade of deterioration. But Godongwana framed the projection as conditional rather than celebratory. The peak holds only if four pillars hold simultaneously. Macroeconomic stability. Structural reform. State capability. Infrastructure delivery.
He situated the Budget in a period defined by repeated external shocks capable of altering fiscal arithmetic overnight.
“In 2022 I delivered the Budget,” he said. “I woke up the next morning and Dr Peterson says Minister your numbers are gone.”
Then it was Russia’s invasion of Ukraine. This year, days after he tabled the fiscal framework, the United States and Israel launched strikes on Iran. Oil markets reacted sharply. Risk appetite shifted. Capital flows became more volatile.
“That is the environment in which we operate,” he said.
South Africa’s consolidation path remains sensitive to oil prices global growth and borrowing costs. A sustained spike in crude would widen the current account deficit raise inflation risks and complicate the interest rate outlook. Weaker global demand would hit revenue through commodity exports. A repricing of emerging market risk would lift refinancing costs.
In that context macroeconomic stability becomes a defensive necessity.
“Macroeconomic stability on its own is a necessary but insufficient condition,” Godongwana said.
Debt must stabilise. Borrowing costs must ease. Inflation must remain anchored. Without that base reform momentum stalls.
Treasury projects that the current fiscal year marks the peak of the debt trajectory. The primary surplus has been restored and is expected to be maintained over the medium term. Debt service costs remain elevated but are projected to moderate gradually as fiscal credibility improves and risk premia narrow.
Critics have focused on the precise debt ratio at which the peak occurs. Godongwana dismissed that fixation.
“Our target was the year in which we were to reach the peak not the number,” he said.
Direction matters more than decimals. But trajectory is sustained by arithmetic.
Khetha Dlamini, chief director for fiscal policy at National Treasury, outlined that arithmetic. Treasury expects to achieve the debt stabilising primary surplus this year and has for the first time published a longer term path averaging close to three percent of GDP.
“For the first time in a budget document in fact in any of our official documents we actually outline what we think the long term path of the primary surplus will be,” he said.
Under baseline assumptions that level is sufficient to stabilise debt and gradually reduce it over time. It also builds in buffers against weaker growth.
Dlamini stressed that the framework has been recalibrated for a lower growth world. Scenario planning is embedded in the macro fiscal projections. Treasury has modelled stronger and weaker global environments and recalculated the fiscal path accordingly.
Speaking during the panel discussion, Boipuso Modise, head of economic policy and international cooperation at National Treasury, acknowledged the limits of forecasting in a volatile global environment.
“We have had to learn to be agile,” she said. “We know that we do not know a lot.”
Trade tensions are rising. Capital flows remain volatile. Oil prices are exposed to geopolitical risk. The framework is designed to bend under pressure without breaking.
Deputy finance minister Ashor Surapen framed stabilisation as institutional credibility rather than short term optics.
“The national budget at its core ultimately is a credibility document,” he said.
It signals whether government understands its constraints and whether trade-offs are being confronted rather than deferred.
But credibility alone does not generate growth.
“Stabilisation is not the destination it is the platform,” Surapen said. “We are not trying to stabilise our way to prosperity. We know that we must grow there.”
In Treasury’s sequencing macro credibility lowers the risk premium. A lower risk premium reduces borrowing costs. That improves the investment case. Stronger capital formation lifts employment.
“When macroeconomic credibility improves the risk premium falls. And when the risk premium falls capital formation becomes more attractive. And when capital formation strengthens employment follows.”
Treasury projects an improvement in gross fixed capital formation after two years of contraction. That projection assumes reform momentum continues and infrastructure bottlenecks ease.
The second pillar is structural reform.
Godongwana described the reform programme as cumulative rather than episodic. Energy reform has reduced load shedding intensity. Freight rail is under structured intervention. Visa reforms have eased bottlenecks in tourism and skills mobility. Digital infrastructure reform has improved spectrum allocation and connectivity conditions.
“These are complementary to macroeconomic stability,” he said.
Energy reliability without logistics efficiency is insufficient. Visa reform without municipal capability does not unlock investment. Digital reform without regulatory clarity remains partial.
Surapen linked reform directly to investor behaviour.
“Growth is not a slogan,” he said. “For us it is a function of risk and return.”
Reforms in network industries are intended to lower the cost of doing business. If the cost base falls and certainty improves capital follows.
Standard Bank group chief executive Sim Tshabalala used his address to argue that regulatory reform should receive sharper focus.
“Regulatory impact analysis regulatory process tracing an emphasis on finding and cutting ancient and irrelevant red tape,” he said. “This is a familiar playbook but it is still one worth following.”
Incremental regulatory reform, he suggested, can produce cumulative gains particularly for smaller and labour intensive firms.
Godongwana acknowledged that regulatory burdens extend within government itself.
“We require accounting officers to do a lot of reporting. That cannot be right.”
The challenge is calibration. Oversight cannot be weakened but friction cannot paralyse delivery.
The third pillar is state capability.
“We have a problem at all levels of local government,” Godongwana said.
Municipalities lack engineers and technical expertise. Capacity is unevenly distributed. Smaller municipalities struggle to spend infrastructure allocations effectively. Funds appropriated in one year remain unspent in the next.
“Should we blame them. Yes and no.”
Institutional depth varies dramatically across the country. Weak procurement systems delay projects. Skills shortages limit oversight. Political instability disrupts continuity.
Metro trading services reform has been tabled to ring fence utilities and improve financial management.
“Reforming at the local level is not peripheral it is central to national growth,” Surapen said.
If municipalities cannot provide reliable water electricity sanitation and basic services investment stalls. If they cannot maintain infrastructure fiscal risks rise.
The fourth pillar is infrastructure.
Godongwana argued that the debate has shifted from allocation to execution. The constraint is project preparation procurement efficiency and institutional coordination.
“There has been incremental reform around infrastructure delivery,” he said.
The aim is to ensure that capital spending translates into visible delivery rather than persistent underspending.
Questions from the floor reflected long standing frustrations with procurement rules. Godongwana’s response was measured. Oversight remains necessary but institutional arrangements must evolve where evidence shows bottlenecks.
Tax policy remains a stabilising instrument.
Hayley Reynolds, director of corporate income taxes at National Treasury, reiterated that the primary objective of the tax system is revenue sufficiency and predictability. South Africa’s corporate and personal income tax ratios are high relative to many peers. The Budget avoids major headline increases.
Revenue concentration remains structural. A small group of companies contributes a disproportionate share of corporate income tax. A limited cohort of individuals accounts for a large share of personal income tax.
“If you consider introducing a wealth tax there is a risk that some of those people might leave,” Reynolds said.
Growth remains the most sustainable way to broaden the base.
Standard Bank corporate and investment banking chief executive Luvuyo Masinda closed on partnership.
“Capital is not a constraint. We are ready to deploy our capital at scale.”
What is required in return is policy certainty bankable projects risk sharing clarity and execution discipline.
When asked what success would look like in twelve months Surapen offered a direct benchmark.
“Have we done the things we said we were going to do.”
Debt stabilisation marks a shift from deterioration to consolidation. It does not eliminate vulnerability.
The fiscal framework is coherent. The surplus path is mapped. The reform agenda is articulated. External risks are acknowledged.
Whether the peak holds now depends on discipline reform and delivery.
Debt may have peaked.
The harder work now begins.
