Finance Minister Enoch Godongwana’s Medium-Term Budget Policy Statement (MTBPS) has left many South Africans disappointed as the government appears to focus on debt stability and strengthening reserves, while millions of South Africans struggle to make ends meet.
Debt Rescue CEO Neil Roets said the country’s latest budget acknowledgements do little to ease household financial burdens. “The Minister has opted to prioritise macroeconomic stability over immediate and structural relief,” said Roets. “South Africa’s weak economic climate, high unemployment rates, and the rising cost of living have taken a toll on consumers, yet the breaks needed to offer genuine support simply haven’t materialised. Many consumers have been pushed to the edge,” he said.
Roets warned that the lack of direct consumer relief might worsen the financial pressure on already overburdened households. “We’re seeing large numbers of people relying on credit just to survive. Without meaningful intervention, this trend will only escalate,” he added.
To address one of the key pain points highlighted by Roets, the finance minister has announced that personal income tax brackets will not be adjusted for inflation. This means that South Africans will effectively end up paying more tax as inflation pushes them into higher tax brackets without any corresponding relief.
“This will have an impact on the monthly budgets of many South Africans,” Roets said. “This, together with the rising cost of basic goods and transport, is going to worsen consumer vulnerability.” He added that the lower inflation outlook might be encouraging on paper, but “doesn’t reflect the lived reality” of most South Africans, many of whom are sinking deeper into debt.
If you have any form of debt, he said, now is the time to start getting structured support. “Consumers must brace themselves for ongoing financial strain.” With the government’s new fiscal consolidation stance, the Treasury aims to contain the ballooning debt-to-income ratio. But critics argue that the current economic context requires more household-level support, especially after the financial shocks experienced by consumers over the past few years.
For the average South African, sentiments are mixed. Many expected the state to listen to households “after the toughest financial year yet,” but the measures announced are not expected to ease immediate consumer difficulty.
Economists continue to warn that South Africa’s debt-to-GDP ratio, now sitting above 70%, puts the country at risk of a future rating downgrade. With inflation still high for the average household, and interest rates yet to make a meaningful return to pre-pandemic levels, consumers remain squeezed between rising costs and stagnant wages. Roets further said, “We need serious relief at retail level. The cost of living has become unbearable for ordinary people. Without intervention, we are going to see more South Africans sliding deeper into over-indebtedness.”
Many analysts say although this budget prioritises the long-term stability of public finances, it offers little immediate financial relief for households and consumer groups warn that the gap between government planning and real-life living costs will continue to widen.