Two realities exist in South Africa. In one, a wealthy minority enjoys a standard of living comparable to Denmark. In the other, the majority live the “struggle after the Struggle”: mass unemployment, hunger, poverty and war-like levels of violent crime. In the first reality, and in the financial markets that speak for it, this 2026 Medium-Term Budget Policy Statement (MTBPS) will be praised as prudent. For the majority, it is more of the same: austerity, privatisation and market-first policies that have failed working-class and poor people for over a decade. It offers no answers to the crises of jobs, hunger, and crumbling public services.
Growth has been cut to 1.2% this year, down from an already paltry 1.6% forecast in February. The fuel levy relief will be wiped out by an even larger fuel price increase in November, and will be phased down from December. The Finance Minister celebrates a growing primary surplus and stable debt, but the poor are paying for this “success” through childhood stunting, DNA backlogs, overcrowded clinics, shrinking free basic services and collapsing municipalities. The new principles-based fiscal anchor, which the MTBPS calls “the most extensive reconfiguration of the public finance system since 1999”, threatens to hard-wire austerity into the state.
Any new spending must be found by cutting elsewhere: a zero-sum budget. The Minister says the budget has grown, but once interest payments and contingency allocations are excluded, consolidated spending falls by 1 percent in real terms between 2026/27 and 2027/28. The R70.8bn tax windfall goes straight into the pockets of bankers and lenders, not into public services. For years we were told austerity was a temporary sacrifice: once debt stabilised, there would be room to invest in growth and essential services. Debt has stabilised, and that promise has also been broken. The MTBPS now commits to building surpluses until 2030. For the majority, the next three years promise more cuts, not relief.
No solutions for the worst hunger crisis in 15 years
Household hunger is at its highest level since 2010, and allocations to address this crisis are abysmal. The Social Relief of Distress (SRD) grant has been eroded by inflation and is worth less than half of the Food Poverty Line. There are 10 million people who should qualify for the SRD grant but are excluded due to punitive application procedures. One of the budget’s big “victories” is a R13 billion saving from cutting out “fraud” in the grant system thanks to the implementation of biometric verification. But this is extremely misleading, as the Gauteng High Court found in 2025 – millions of people are being unjustly excluded due to new regulations, administrative barriers and technology, as well as difficulties accessing the now severely understaffed SASSA offices. Similar “verification measures” are being extended to higher education bursaries and housing, using administrative hurdles as an exclusionary tactic.
More than a quarter of children in South Africa suffer from chronic malnutrition. In the State of the Nation Address (SONA), it was announced that the government will embark on a mission to end child stunting by 2030 in line with the National Strategy to Accelerate Action for Children (NSAAC). The key recommendations in the NSAAC are missing from the MTBPS, and the R1.6 billion allocated to reduce stunting is being reallocated from social grants “savings” (in reality, exclusions) and will be spread over 3 years, equating to about R9 per child per month! By comparison, the Eastern Cape alone needs close to R2bn each year just for its School Nutrition Program. For the millions of children aged 6 to 17, and the adults who go hungry alongside them, the allocation offers nothing at all. The Minister boasts that the MTBPS meets its fiscal targets, yet constitutional rights in some areas are going backwards, and the way the fiscal strategy is assessed makes no one answerable for this erosion.
Despite MTBS lip service, the fight against Gender Based Violence is still unfunded
Following the violent killing of multiple women in Ekurhuleni, the President promised that the MTBPS would provide new funding to combat gender based violence and femicide, as opposed to reshuffling existing overstretched police budgets. In the MTBPS, it was announced that R5.1bn would be allocated to fight GBVF. Of this, R3.8 billion will be allocated to hire 3,522 more social workers. However, the National Development Plan (NDP) has a target of 50,000 social service professionals by 2030. Even with the 3,522 new posts, the workforce would still fall 46% short of this target, and does not even absorb the 6400 qualified social workers trained under scholarships who remain unemployed. Despite the extra R186mn allocated to forensic services, the budget for the forensic science laboratory will still be less than it was a decade ago! All in all, the new allocations for forensic services and shelters to respond to GBVF are hopelessly insufficient for the scale of the problem.
Where are the jobs?
Unemployment sits at 43,8%, the highest level the country has experienced outside of the COVID-19 pandemic. Two of the biggest areas where jobs were lost over the past year have been in the public sector (community and social services) and in manufacturing – together losing 210 000 jobs. On the one hand, austerity has led to a reduction in the number of public sector workers, and the MTBPS itself recognises that public sector headcounts have fallen well behind population growth, straining service delivery (South Africa should have at least 190,000 more public sector workers than we currently do). On the other hand, South Africa has been rapidly deindustrialising, with many high-profile firms under distress or shutting down over the past year, including sectors like steel, ferro-alloys and the automotive sector.
South Africa’s unemployment, inequality and poverty crises should warrant emergency measures, but the MTBPS shows absolutely no urgency with regard to the tremendous suffering gripping our people. In fact, the word “unemployment” only comes up twice in the entire MTBPS document. There are no changes to the notoriously insufficient allocations made to public employment programs in February, and public sector departments are still expected to manage headcount issues themselves by encouraging the early retirement of experienced senior staff to make way for additional, cheaper junior staff. As for the Department of Trade, Industry and Competition, it is expected to implement the new Industrial Development strategy with no new funding over the next three years. In real terms, funding for industrialisation and exports will fall by 13.4% between 2025 and 2030.
Fix the state, don’t sell it
It is clear that this MTBPS was one for the financial markets and credit rating agencies. What is also clear is that improving conditions for the private sector have done very little to meaningfully grow the economy, create jobs, increase productive investment, or improve any of the indicators that matter the most. Unemployment is now higher than when Operation Vulindlela began. Government has established a credit guarantee vehicle to de-risk private investment in critical infrastructure, starting with the expansion of the electricity transmission grid. The unbundling of Eskom and the increased number of Public- Private Partnerships (PPPs) at a municipal level is supposed to introduce competition and bring prices down, but the MTBPS states that “electricity and water tariffs are set too low to cover the full cost of maintenance and bulk water supplies”, hinting at price increases in the future for water and electricity. PPPs often hide the full cost of debt, and further privatisation risks turning rights-holding citizens into clients who no longer have enabling access to basic services.
No wins for local government or basic services
In two weeks’ time, the country will be heading to the polls for the local government elections. Local government is critically important as it is both responsible for basic services and, at the same time, is the site of intense underfunding and mismanagement. In the MTBPS, the finance minister says that local government will receive 10% of the National Division of Revenue. It was claimed to be a significant milestone. While this represents an increase in the total share of the pie, over the medium term, real spending on local government only increases by 1.1 percent. Funding to local government remains woefully inadequate because municipalities are expected to raise 90% of their revenue through rates and service charges, but the reality is that most South Africans cannot afford to pay for services and are excluded from indigent registers. In order to make up for these inadequate revenues to local government, we see the roll-out of Smart Meters. This forces people who can’t afford to pay to pay for services that everyone needs to live a dignified life.
During his speech, the minister said that 11 million households receive free basic services, but this only refers to the official allocation – in reality, only 2.8 million households actually receive the very low levels of free basic services – a mere quarter of the total number of indigent households. A major reason is that municipalities are disincentivised to ensure more households receive it, as it reduces their potential revenue through service charges.
Alternatives exist
Many commentators will argue that National Treasury needs to balance the books and can only fulfil constitutional rights as far as existing resources allow. While there are finite resources, limitations are often construed politically and subjectively. In the world’s most unequal country, it is not a radical idea to demand more redistribution so that everyone can live in dignity. Alternatives to austerity and deprivation exist.
It includes:
Economic transformation must come before fiscal surpluses. South Africa urgently needs large-scale public investment in public services, social protection, and economic and social infrastructure: the surest way to stimulate growth, expand employment and ease the debt burden. Chasing a primary surplus amid mass unemployment and deep poverty is economically irrational and socially destructive. This MTBPS chooses bondholders – the very rich over people. South Africa needs a budget that chooses people.
