For ordinary South Africans, the state of the public finances is not an abstract market story. It determines whether the social wage holds, whether services can be protected, and whether government has room to respond to disasters and shocks. On that measure, the picture emerging from the medium-term budget policy statement is more reassuring than much of the public debate suggests, according to Peter Attard Montalto, who leads on political economy, markets and the just energy transition at Krutham, a South African research-led consulting company.
The headline narrative around the budget has centred on large windfall gains from mining. Attard Montalto argues this misses the point. Mining and banking taxes have been strong, but not by much more than could have been forecast a year ago, and that strength was already embedded in forecasts. The genuine upside surprise lies elsewhere. Underlying revenue momentum, once windfalls and fuel levy cuts are stripped out, has been exceptionally strong even as growth has been downgraded. That signals a deeper, more resilient tax base, and it matters directly to citizens because it underwrites the public services they rely on.
Part of the improvement comes from better collection by the South African Revenue Service, though Attard Montalto notes the institution lays on the self-congratulatory public relations a little thick, something he hopes will change under a new commissioner, and to a lesser degree from debt-book payments. Beyond that, a deeper resilience has become increasingly clear in the five years since Covid. It may be a product of a deeply unequal economy in which high barriers to entry protect firm profits, but the practical consequence is that trend revenues are likely to sit meaningfully above Treasury estimates even as windfalls ebb and flow.
At roughly R50bn a year over the medium run, that is not enough to radically rethink expenditure. It is, however, enough to ensure debt turns more meaningfully lower, that new issuance is minimised, and that reforms and the social wage are properly supported. For this year, revenues are now expected to come in at least R50bn above the February budget figure. The 1.6% of GDP primary surplus pencilled in at the budget was too conservative; the year could end above 2%. Combined with sizeable bond redemptions that pass quietly thanks to cash buffers, the Gold & Foreign Exchange Contingency Reserve Account and the underlying fiscal position, debt falls definitively, if moderately, over the coming years.
This is a different narrative place, and it speaks to fiscal resilience despite low growth. It rather puts paid to the final vestiges of doom-mongering pessimism in at least one ratings agency and in some corners of the market. Even the Reserve Bank, with a large number of former Treasury people now in its leadership, has been surprised, commenting increasingly over the past 18 months on the fiscal turnaround. The market’s pre-Covid view of a “primary deficit forever”, perhaps the right call in the mid-2010s under prior leadership of the country and the Treasury, has long since gone, and the risk skew on bond issuance has flipped to the upside. None of this belittles the final hurrah on state-owned enterprises and their unbundling, necessary spending on disasters, or risks around the social wage. It is simply a different thing to handle these from a position of resilience rather than under the market cosh. A fuller treatment of these arguments appears at https://www.businessday.co.za/opinion/2026-10-21-peter-attard-montalto-fiscal-turnaround-challenges-pessimism-in-south-africa/
Politics, though, is where public anxiety has concentrated. The run-up to local elections, the next steps in the US’s punitive campaign against South Africa and the budget itself have arrived in short order. Attard Montalto argues the election debate has been distorted by an over-focus on Johannesburg and a pot-stirred freakout over the DA potentially losing Cape Town. The broader shift is real but limited, more a mark-to-2024 in which shifts in administration can happen, even the MK party in eThekwini, which markets would not like. There is no big bang and little new for 2029 beyond longer-term trends continuing.
The vibes of something bigger, extrapolating Joburg to the nation, have people questioning the stability of the government of national unity after the election results in two weeks. Yet the incentives, by his reading, do not support that drama. He has yet to meet anyone in the ANC who, despite the public spin, is not fully aware of the bloodbath it could suffer in key metros. Nor is there appetite to remove ANC president Cyril Ramaphosa when no faction seems ready for an early fight over shrinking spoils, let alone into the end of next year. The payoffs for all sides of the GNU outweigh the downsides. The ANC knows the risks of going with a dying EFF, and MK is misdiagnosed as the same flavour, which it certainly is not. The DA needs national incumbency to implement its local government manifesto on private utilities, which was also ANC policy in the last administration, though the ANC has chosen not to make it a leading campaign point. Risk worries, he concludes, seem vastly overblown, though dynamics will need recalibrating after next year’s ANC elective conference.
On the United States relationship, he urges citizens and social partners, including business, to resist exaggerated scaremongering. Just fewer than 3,000 jobs would be directly affected by a loss of Agoa trade benefits, perhaps 9,000 including indirect and imputed jobs, a macro rounding error in the wider unemployment crisis. Even agriculture, which would be hardest hit, is seeing healthy double-digit growth in global exports excluding the US year to date. The real issue is the wider tariff wall, which could rise further and is more impactful and more important to watch. As South Africa is buffeted by global forces, keeping an eye on the real issues rather than misplaced narratives remains the prudent course.