In a rare candid moment of camaraderie, finance minister Enoch Godongwana thanked Reserve Bank governor Lesetja Kganyago and outgoing South African Revenue Service commissioner Edward Kieswetter for their roles in improving South Africa’s economic position ahead of his budget.
The minister held a briefing ahead of the tabling of his 2026 budget in Parliament on Wednesday. The budget includes the first measure of relief for taxpayers in two years and other tailwinds from a tighter central bank inflation target.
However, far from the tense exchanges that the minister has had with the two officials, the circumstances of the budget lock-up were uncharacteristically cordial. South African taxpayers have been spared R20bn in new taxes thanks to improved collection efficiency from Sars.
According to this year’s Budget Review, revenue collections for 2025/26 are projected to be R28.8bn higher than the 2025 budget estimate, and non-interest expenditure is increased by R22.1bn. The government is expected to achieve a primary surplus of 0.9% of GDP.
Last year, Godongwana and Kieswetter had a difference of opinion about whether to hike taxes or bolster Sars’ collection capabilities. On Wednesday, the minister and the taxman traded pleasant words as Kieswetter prepares to leave the position.
This time last year, as Godongwana needed an unprecedented three attempts to table a budget after a proposal to raise value-added tax (VAT) was rejected by members of the GNU cabinet in February and then by committees of parliament in April.
A year later, with Kieswetter set to vacate the position of Sars commissioner in April, Godongwana made it a point to thank the taxman for improving the operational, financial and governance position of the revenue service.
You will understand that Sars was hollowed out through state capture… It is through the commissioner that we have been able to transform that institution to what it is today.
— Finance minister Enoch Godongwana
“We must take this opportunity… to thank the commissioner for his contribution in transforming Sars. We must take the time to understand the work that was done to turn around Sars.
“You will understand that Sars was hollowed out through state capture… It is through the commissioner that we have been able to transform that institution to what it is today.”
When asked about the progress in finding a new Sars commissioner, Godongwana said the search was ongoing but that there was a common agreement between Treasury, Sars and President Cyril Ramaphosa that a candidate be found by April 1.
“Now that I am going to bid farewell to him [Kieswetter], I am not going to introduce him,” the minister said jokingly at the beginning of the lock-up briefing.
Godongwana also had a standoff last year with SARB governor Kganyago over signals that the central bank put out last year outlining the benefits of a tighter inflation target before the announcement was made in the November medium-term budget policy statement (MTBPS).
A tense standoff ensued between the Treasury and the central bank in August after Kganyago announced the Bank would henceforth base future interest rate decisions on a 3% anchor rather than the former target band of 3% to 6%.
A day after that announcement, Godongwana issued a terse statement saying a policy change on inflation targeting would be taken only in consultation with the cabinet and the president. He said he had no intention of making the inflation target announcement in the MTBPS.
Three months after Godongwana announced a new inflation target of 3%, the National Treasury praised the reform for having an immediate positive impact on the South African economy, debt profile and inflation resilience.
National Treasury director-general Duncan Pieterse said that due to the tighter inflation target, by 2028/29 South Africa’s debt stock would be R277bn lower in this budget relative to the MTBPS, and R47.6bn of that would come from lower lead elevations of South Africa’s inflationary bonds.
After the tabling of the budget, the rand immediately strengthened to about R15.85 against the dollar.
Godongwana, with the help of Kieswetter and Kganyago, presented a budget with complete tax relief and a solution to inflation.
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