Budget Speech 2026Fiscal Strategy |
Madam Speaker, a key facet of macroeconomic stability is prudent fiscal management that advances socioeconomic obligations.
Our fiscal strategy involves four key features:
| • | Support economic growth by accelerating public investment. |
| • | Improve the efficiency of public spending. |
| • | Improve the composition of spending by containing the public-service wage bill while increasing capital investment. |
| • | Entrench sustainable public finances with a principles-led fiscal anchor. |
We are already reaping the fruits of this strategy.
The consolidated budget deficit has narrowed to 4.5 per cent of GDP for 2025/26, an improvement from 4.8 per cent that we estimated in the 2025 Budget. The deficit falls to 4 per cent in 2026/27 and 3.1 per cent the year after.
Gross debt stabilises as a share of GDP in 2025/26, at 78.9 per cent. In 2026/27 it falls further, to 77.3 per cent of GDP and declines to 76.5 per cent by 2028/29.
The slightly higher debt peak this year reflects weaker nominal GDP growth and our decision to take advantage of strong investor demand in domestic and global markets by increasing issuance in 2025/26.
The main budget primary surplus for 2025/26 reaches 0.9 per cent of GDP.
In the next financial year it expands to 1.6 per cent, and then to 1.9 per cent in 2027/28. By 2028/29, we see it reaching 2.3 per cent.
Honourable Speaker, to sustain fiscal discipline, we intend to continue the engagements on fiscal anchors.
We aim to introduce a proposal for a principle-based fiscal anchor in the Medium-Term Budget Policy Statement after thorough consultation in Cabinet, Parliament and with the public.
Just as inflation targeting provided clarity and credibility to monetary policy, the fiscal anchor aims to entrench fiscal credibility.