South Africa recorded stronger national government revenue during the first three months of the 2026/27 financial year, while new multilateral financing has helped government meet its foreign-currency borrowing needs on favourable terms.

Revenue reached R241.5 billion in June 2026, up from R212.7 billion a year earlier. Cumulative revenue for April to June rose to R505.6 billion, compared with R454.1 billion over the same period in 2025. Expenditure amounted to R161.4 billion in June and R503.6 billion over the quarter, leaving government with a small cumulative surplus by the end of June.

The fiscal position has also been supported by a US$1.5 billion Development Policy Loan signed with the World Bank. The 15-year loan includes a three-year grace period and carries an interest rate of six-month SOFR plus 1.35%. Together with financing from other multilateral development partners, it has enabled government to meet its full US$3.2 billion foreign-currency borrowing requirement for 2026/27.

The financing supports reforms in electricity, freight and logistics, and water and sanitation. These interventions are intended to ease infrastructure constraints, improve competitiveness and create a stronger foundation for inclusive growth and employment.

The South African Reserve Bank’s July assessment nevertheless highlights the difficult economic environment in which fiscal consolidation and reform must take place. First-quarter growth was stronger than expected, at close to 2% year-on-year, but this was driven by net exports rather than domestic demand. Growth is expected to slow during the second and third quarters as consumer and business confidence weaken and uncertainty weighs on investment.

The Reserve Bank also identified municipal dysfunction as an increasingly binding constraint on economic growth. It argued that South Africa’s longer-term prospects depend mainly on domestic reforms, including fixing local government, improving transport and energy productivity, maintaining sustainable debt and securing permanently lower inflation.