Masondo: 2026 Budget Redistributive, Yet Fiscally Disciplined

Deputy Finance Minister Dr David Masondo has defended the 2026 National Budget as both redistributive and fiscally responsible, arguing that the government has struck a balance between supporting the poor and maintaining macroeconomic stability.

Masondo was speaking at a post-Budget breakfast discussion hosted by National Treasury in partnership with Brand South Africa and the Government Communication and Information System (GCIS).

Growth Strategy Anchored on Four Pillars

National Treasury's economic strategy underpinning the 2026 Budget is built on four pillars:

• Maintaining macroeconomic stability

• Implementing structural reforms

• Investing in growth-enhancing infrastructure

• Building state capacity

Masondo said these priorities are ultimately aimed at improving the lives of ordinary South Africans.

"All these things are significantly linked to the interests of the poor. At the end of the day, it's what impact will this have on the ordinary person in terms of jobs," he said.

He stressed that without economic growth, government cannot generate the tax revenue required to fund essential services such as education and healthcare.

60% of Spending Directed to the Poor

Rejecting claims that government is pursuing austerity, Masondo said the composition of spending tells a different story.

"This is a redistributive budget in terms of expenditure as 60% of the budget goes to the poor. Those who say we are austere must look at the facts," he said.

The emphasis on social spending and pro-poor expenditure, he argued, demonstrates that fiscal consolidation does not equate to abandoning vulnerable communities.

Withdrawal of R20 Billion in Tax Increases

A notable feature of the 2026 Budget, Masondo said, is the withdrawal of approximately R20 billion in planned tax increases.

"What is different about this year's budget is that we have withdrawn the tax increase. It also has to do with the fact that we have been responsible in managing our fiscal policy and that has implications on the cost of capital," he explained.

He noted that investors closely monitor sovereign risk premiums, deficit levels, primary budget balances and growth prospects when assessing a country's cost of capital.

Lower Debt Costs Create Fiscal Space

Masondo said improved fiscal management is beginning to yield tangible results, particularly in debt servicing costs.

"With the debt service costs going down…the debt service costs are going to reduce by R10 billion," he said.

The savings, he added, create fiscal space to fund social priorities and support entrepreneurs, while cheaper capital improves the country's ability to mobilise investment for job creation.

Balancing Stability and Social Impact

The Deputy Minister's remarks reinforce government's position that fiscal discipline and redistribution are not mutually exclusive.

By stabilising debt, narrowing the deficit and managing borrowing costs, Treasury argues it is creating a sustainable foundation for long-term growth — while maintaining substantial social expenditure.

Masondo concluded that economic growth remains the central lever for reducing poverty and unemployment.

"Without growth, you cannot sustain redistribution," he said, underscoring the government's belief that fiscal credibility and social development must advance together.