Fuel levy relief of R10 billion has bought the Treasury breathing space, but economists and labour federations agree that the deeper questions raised by the 2026 Medium-Term Budget Policy Statement remain unresolved: how the fuel price is set, whether fiscal policy can deliver growth, and who will carry the cost in the meantime.
The relief, announced by Finance Minister Enoch Godongwana in the statement, reduces the fuel levy by R3 a litre for diesel and R1.50 a litre for petrol from 4 November to 1 December, continuing at a lower amount until 5 January 2027. The R10 billion, transferred to the Central Energy Fund, will be returned to the National Revenue Fund and placed in the contingency reserve once the measure ends.
National Treasury director-general Duncan Pieterse explained the mechanism behind the intervention. The R10 billion originated from revenue collected above forecast in the 2025/26 financial year, he said, and was placed on the Special Appropriations Bill for allocation to the Central Energy Fund.
Economists have welcomed the temporary cushion for households and businesses against rising fuel costs, but they argue that the more consequential decision in the statement is the commitment, long overdue in their view, to review and streamline the formula used to set fuel prices each month.
Professor Raymond Parsons, of North-West University Business School, described the statement as “a realistic, positive and credible approach to a challenging economic and fiscal situation”. He said the review of the monthly pricing formula should be expedited to give the government greater flexibility in responding to future price pressures. Parsons also pointed to rising transport costs and fuel price pressures reflected in September’s consumer price index figures as evidence that the formula needed attention.
For Parsons, the broader message of the statement was “confidence-building”. Although the global energy crisis had disrupted South Africa’s modest economic recovery, it had not definitively derailed it, he said. The budget reaffirmed the government’s commitment to stabilising debt and protecting the primary surplus, which provides predictability for bond markets and credit rating agencies.
Yet he cautioned that the surplus was increasingly a defensive measure against a tougher economic climate rather than a springboard for inclusive growth. He welcomed the emphasis on infrastructure, local government and partnerships with the private sector, but argued that fiscal discipline alone would not reduce public debt without stronger, job-rich growth. Looking ahead to February’s main budget, he said fiscal policy should shift the focus from stability to faster growth, warning that the economy was expanding too slowly and that weak growth “will undermine the fiscal trajectory”. “What South Africa now needs from the right policies, including help from future fiscal policy, is a GDP growth rate that outpaces interest spending and debt ratios,” he said.
University of Johannesburg associate professor of economics Peter Baur called the statement “an honest reflection of key challenges faced by government, particularly as we head towards the next elections”. “Going forward, government has some serious financial considerations to address, providing adequate support to an economy working through turbulent times,” Baur said.
By contrast, labour federations were far less generous. Cosatu and the South African Federation of Trade Unions criticised the statement as another example of the government’s “obsession with neo-liberal austerity budget”.
Cosatu national spokesperson Matthew Parks said the federation was disappointed that the budget had not delivered a bolder response to unemployment, which he put at 43.8%, despite the competing demands facing the state. Weak growth, averaging 1% for more than a decade, had entrenched poverty and inequality, while crime and corruption had contributed to embattled public and municipal services, he said.
“Whilst it is important to place the budget’s debt and deficit on a sustainable trajectory, this cannot be at the expense of stimulating the very economic growth and job creation essential to South Africa’s long-term recovery,” Parks said. He argued that an obsession with austerity cuts and a preference for early retirement packages was not a sustainable path to growth, and called a forecast to reach only the 3% growth needed for unemployment to fall by 2034 “beyond depressing”, noting that unemployment had risen 2.2% this year alone.
The federation did welcome some allocations: R18 billion worth of investments in industrial projects, R1 billion to boost local pharmaceutical and vaccine manufacturing, helping to create over 5 200 jobs, and R2 billion in approved allocations for 32 infrastructure projects. Cosatu also welcomed the fuel relief itself, saying it reflected the government’s response to its call for support for workers and the economy, easing the burden on commuters, injecting money into the economy, lowering inflation and hopefully preventing a November repo rate hike. Parks added that an overhaul of fuel taxes and levies was needed, including fixing the Road Accident Fund.
But the federation said it was “extremely disappointing that no further allocations have been made to boost public employment programmes to give hope to 12 million unemployed”, and “beyond shameful” that, despite R13 billion worth of savings in social grants, there was again no inflationary relief for the eight million destitute SRD grant recipients. While worried about the loss of skills through early retirement packages, Cosatu welcomed the commitment to use savings to hire young recruits, filling an additional 7 101 frontline service posts.
Saftu general secretary Zwelinzima Vavi echoed the criticism, saying the statement continued to impose neoliberalism and austerity on a society “already being torn apart by unemployment, poverty and inequality”. He criticised the growth forecasts of 1.2% in 2026, rising to 1.6% in 2027 and around 2% by 2029, saying the figures confirmed the economy remained trapped in low growth with no break from the policies that had entrenched deindustrialisation and mass unemployment.
Vavi said the spending squeeze was already clear: in 2024/25 rand values, real public spending per person is projected to fall from R34.607 in 2019/20 to R26.496 in 2026/27, a decline of about 23%, and by 2022/23 it had already fallen back to its 2008/09 level. He cited expanded unemployment of 46.3% on Statistics SA’s LU4 measure, nearly 66.7% of people living below the upper-bound poverty line in 2023, and a poverty line of R2.962 per person per month in 2026. A nutritious food basket costs R6 459.83, while food for one child costs R970.27 a month, far above the R580 child support grant.
Federation of Unions of South Africa general secretary Riefdah Ajam said fiscal stability should “translate into tangible improvements in the lives of workers, their families and vulnerable communities”, noting that South Africans continue to face high living costs, unemployment, pressure on public services and uncertainty about the country’s economic prospects. While welcoming the temporary levy relief, she cautioned that fuel prices affect transport costs, food prices, production and the cost of delivering essential goods and services.
The temporary relief, funded from better-than-expected revenue, gives the Treasury room until January. The accountability test that follows, on both sides of the debate, is whether the promised review of the fuel pricing formula and February’s main budget convert a short-term cushion into a durable policy.