#MTBPS: Fuel-levy relief as SA tackles growth barriers

Source: Reuters. South African Finance Minister, Enoch Godongwana.

"The announcement is welcome news for consumers and businesses, offering some relief as rising fuel costs put further pressure on household budgets and operating expenses across the economy," said Andrew Golding, chief executive of the Pam Golding Property group.

"The R3 per litre reduction in the diesel levy and R1.50 per litre reduction in the petrol levy from 4 November to 1 December 2026, with relief to continue at a lower amount until 5 January 2027, will help to cushion the impact of high fuel prices.

"Higher fuel costs have implications well beyond motorists, influencing transport, distribution, food prices and inflation more broadly. While the relief is temporary, it offers some breathing space for households and businesses facing mounting costs."

Elna Moolman, Standard Bank group head of South Africa macroeconomic research said Treasury's focus is now shifting to clearly prioritising economic growth.

"Fiscal revenues were higher than expected, partly owing to the boost to mining company earnings from higher commodity prices. This revenue windfall was used largely to increase infrastructure spending, which Treasury believes should boost growth and employment.

"Furthermore, it is very encouraging to see the range of interventions being implemented to improve municipal finances and services.

"Fiscal revenues were higher than expected, partly owing to the boost to mining company earnings from higher commodity prices. This revenue windfall was used largely to increase infrastructure spending, which Treasury believes should boost growth and employment."

Infrastructure drives growth

The increased infrastructure spending forms part of a broader strategy to address structural constraints and place the economy on a stronger growth trajectory.

Government’s strategy to accelerate economic growth rests on structural reforms, stronger state capability and increased investment in public infrastructure. Godongwana said these measures are intended to remove barriers to growth, attract private investment and improve service delivery.

Infrastructure investment is central to this approach.

The Infrastructure Finance and Implementation Support Agency (IFISA) is supporting projects across all spheres of government with a potential investment value exceeding R217bn. Meanwhile, government is fast-tracking public-private partnerships (PPPs), including municipal infrastructure projects, which account for 31 of the 68 projects in the pipeline.

The Budget Facility for Infrastructure (BFI) has approved more than R100bn in fiscal support, while infrastructure bonds have raised over R14bn for projects in the BFI pipeline. Government is also prioritising infrastructure maintenance, better project selection and stronger implementation capacity to ensure investments deliver economic returns and improve public services.

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Reforming essential services

Structural reforms are targeting electricity and water, among other sectors. Eskom’s restructuring and an independent transmission operator are intended to encourage competition, attract generation investment and expand the electricity grid.

Water reforms focus on improving infrastructure maintenance, reducing losses, strengthening municipal capacity and improving revenue collection.

"Too many households and businesses still face unreliable water supply. Government’s response through the National Water Action Plan focuses not only on infrastructure, but on fixing institutions responsible for delivering water services. By addressing both infrastructure and institutional weaknesses, we are laying the foundation for reliable water services and stronger local economies," Godongwana said.

Moolman added that the MTBPS is also positive for investors and the credit-rating agencies, insofar as it reiterates the commitment to restoring SA’s fiscal sustainability.

"There might ultimately be further positive rating action," she said.

Looking ahead

Fiscal discipline is intended to support this growth agenda, Godongwana said. Government aims to reduce waste, improve spending efficiency and increase the primary surplus to nearly 3% of gross domestic product (GDP) by 2030, while narrowing the budget deficit. Proposed fiscal anchor legislation is intended to strengthen transparency, accountability and fiscal sustainability.

However, growth remains constrained by rising costs, weak domestic activity and a deteriorating global environment. Since Israel and the United States attacked Iran in February, the resulting closure of the Strait of Hormuz, a key route for Middle Eastern oil exports, has disrupted global oil supplies and driven up food and energy prices.

Against this backdrop, global growth is now estimated at 3.1% in 2026, down from the 3.3% projected in January, according to the MTBPS. With external pressures adding to South Africa’s domestic growth challenges, the impact of structural reforms will take time to materialise.

“The interventions will, by nature, take time for these reforms to have a visible impact, but at least constructive policy interventions are gaining momentum,” Moolman concluded.