MTBPS 2026 | Government to allocate R10bn for El Niño response
As the El Niño phenomenon, which is expected to bring heat and dryness to South Africa and other parts of the region draws closer, the finance minister has allocated R10bn in the Medium-Term Budget Policy Statement to respond to the weather event.
Minister Enoch Godongwana tabled his 2026 Medium-Term Budget Policy Statement (MTBPS) before a joint sitting of parliament in Cape Town on Wednesday afternoon.
There are concerns about the impact of the El Niño event on the agriculture sector, which has faced its fair share of pressure.
Tabling the speech, Godongwana said the prolonged conflict in the Middle East, alongside El Niño and its likely impact on producer costs and output, could further weaken domestic growth.
“Domestic economic activity has already lost some momentum, especially in export-linked sectors. We now forecast real economic growth of 1.2% in 2026, down from the 1.6% projected in February. Growth is expected to reach 1.6% in 2027, and 2% by 2029.”
The MTBPS made room for the allocation by revising spending plans for the 2026/27 financial year, including an upward adjustment of R10.6bn in spending, R1.9bn in rollovers from the previous financial year, and R6.2bn in disaster relief spending.
“Government will allocate R10bn of the in-year revenue overrun to the contingency reserve for the El Niño response and other risks. The remainder is a provisional allocation for infrastructure projects currently under evaluation by the Budget Facility for Infrastructure.
“In the primary sector, agriculture grew by 3.5% as strong horticulture and grain output offset the lingering effects of animal disease outbreaks. An anticipated El Niño is expected to raise costs and reduce output from late 2026 into 2027,” he said.
“Risks to the fiscal outlook include weaker-than-expected global and domestic economic growth, higher borrowing costs, volatility in gross tax revenue, the financial health of state-owned companies, and the impact of El Niño.”
El Niño refers to a year-long Pacific Ocean event that takes place in two- to seven-year cycles, which pushes global temperatures up, driving warmth up from the ocean into the atmosphere. It is expected to make most of South Africa and the Sahara region drier than usual, while East Africa is expected to be wetter than normal.
The event is expected to heighten risks to food security in Nigeria, Sudan, Ethiopia, Somalia, Kenya, Malawi, Madagascar, Uganda, Cameroon, Mozambique and Zimbabwe, according to the World Food Programme and the Food and Agriculture Organisation.
On the economic development front, the MTBPS said expenditure is projected to grow by 4.4% over the medium-term expenditure framework period, largely due to investment in transport infrastructure. Agricultural interventions will strengthen food security and biosecurity.
“To contain foot-and-mouth disease, R423.4m is reprioritised in the department of agriculture in 2026/27, and R183m is rolled over from the previous financial year to roll out vaccines. The department of trade, industry and competition will reprioritise R1bn to strengthen regional value chains and links between special economic zones and expand pharmaceutical and vaccine manufacturing.”
Over the medium term, 870 land restitution claims will be settled, with stronger post-settlement support to improve access to economic services for beneficiaries.