Category: MIL-OSI

Government has identified R38.1 billion in savings over the medium term as it works to improve the quality of spending and direct funds towards efficient and effective programmes.

The savings form part of a shift away from incremental, input-driven budgeting towards strategic decisions based on outcomes, affordability and value for money.

Finance Minister Enoch Godongwana said government is phasing out programmes that are no longer fit for purpose.

“We are also restructuring underperforming and inefficient programmes, and reducing administrative inefficiencies and fraud in programmes,” the Minister said on Wednesday while delivering the Medium-Term Budget Policy Statement (MTBPS) in Parliament on Wednesday.

In addition to the R12 billion identified in the 2026 Budget, a further R38.1 billion has been identified over the 2027 Medium-Term Expenditure Framework (MTEF) period:
•    R11.7 billion from low-priority programmes and measures to reduce duplication and administrative inefficiencies in national departments;
•    R13 billion from reducing fraud in social grants;
•    R7.8 billion from the human settlements development grant, where programme inefficiencies and rent-seeking have resulted in less spending on building houses; and
•    R5.5 billion from surpluses in public entities.

Godongwana said efficiencies and savings could also be found in provincial budgets. For example, implementing more effective remuneration policies for healthcare workers could enable provinces to employ more health professionals.

The National Treasury’s MTBPS document emphasised that improving the quality of spending by allocating funds to efficient and effective programmes is a fundamental reform of the budget process.

“Targeted and responsible savings are identified by assessing programmes on a common basis and asking key questions. Are programmes legally required? Are they aligned with policy priorities? 

“Do they efficiently deliver measurable outputs and outcomes? Is there persistent underspending or poor performance? Could the same objective be achieved at lower cost or through a better institutional arrangement?” 

“Government will continue to reduce leakage and fraud by improving administration and verification, redesigning programmes that fail to meet their objectives, redirecting funds from low priority, inefficient or duplicated activities and addressing accumulated cash surpluses in public entities,” National Treasury explained.

These savings have been reprioritised and redirected across the fiscal framework.

Revised spending for 2026/27

The 2026 Adjustments Appropriation Bill proposes an upward adjustment of R10.6 billion to expenditure.

This includes R1.9 billion in rollovers from the previous financial year and R6.2 billion for unforeseeable and unavoidable expenditure, mostly for disaster relief.

An additional R2.2 billion is provided for early-retirement and voluntary-exit packages for qualifying public servants.

A Special Appropriation Bill for 2026/27 is proposed, allocating a total of R6.9 billion, mainly to the South African Revenue Service.

“Government will allocate R10 billion 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,” National Treasury said.

In the adjustments budget, R150 million is allocated to enhance the technical capabilities of the digital services unit, which will lead the development of the MyMzansi app. The app will allow citizens to access government services through a single digital platform.
A further R20 billion has been earmarked for infrastructure projects currently under evaluation by the Budget Facility for Infrastructure.

In-year adjustments

The Minister said the additional revenue in 2026/27 means government can increase expenditure by R45.5 billion compared with what was announced in February.

Together with allocations from the contingency reserve, the Adjustments Appropriation Bill includes:
•    R6.2 billion for unforeseeable and unavoidable expenditure, mostly for disaster relief and rehabilitation;
•    R1.9 billion rolled over from the previous financial year;
•    R4.3 billion in self-financing expenditure;
•    R823 million for the South African National Defence Force to deploy troops to assist the police in fighting gang-related crime and combating illegal mining; and
•    R516 million for the Madlanga, Khampepe and Nkabinde commissions of inquiry.
–SAnews.gov.za
 

 

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Finance Minister Enoch Godongwana has announced an R810 million recapitalisation of the South African Police Service (SAPS) vehicle fleet next year, alongside an additional R2.2 billion over the medium term to strengthen the independence of the judiciary.

“Crime and corruption weaken governance and hold back the economy. They rob the fiscus of funds intended for service delivery and raise the cost of doing business,” the Minister said on Wednesday.

Godongwana made the remarks while delivering the Medium-Term Budget Policy Statement (MTBPS), in which he outlined the government’s revised economic outlook and adjusted expenditure estimates.

In addition to this year’s allocations to the Border Management Authority, government is increasing the number of labour inspectors.

“The government is also considering measures to strengthen the capacity of the border inspectorate and immigration officers to address our challenges with illegal migration,” Godongwana said.

He added that the Financial Action Task Force’s (FATF) 18-month Mutual Evaluation process is under way.

“It evaluates the technical compliance and effectiveness of the implementation of laws. It tests whether our laws work in practice through investigations, prosecutions and asset forfeitures.

“We are striving to achieve technical compliance and fully implement the FATF recommendations. These efforts have been supported by investments in fighting crime and corruption,” Godongwana said.

The FATF is an intergovernmental financial watchdog established to combat money laundering, terrorist financing, proliferation financing and other threats to the integrity of the international financial system.

It sets global standards for anti-money laundering and counter-terrorism financing, promotes their effective implementation and conducts mutual evaluations to assess countries’ compliance with its recommendations.

In 2026, South Africa was removed from the European Union’s list of high-risk third-country jurisdictions.

This followed South Africa’s removal from the FATF grey list – formally known as the list of jurisdictions under increased monitoring – and the United Kingdom’s list of high-risk countries for money laundering and terrorist financing. Both removals took effect on 13 October 2025. – SAnews.gov.za

 

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South Africa’s gross tax revenue forecast for 2026/27 has been revised upwards by R17.1 billion, supported by stronger-than-expected collections from corporate income tax, dividends tax and Value-Added Tax (VAT), Finance Minister Enoch Godongwana announced on Wednesday.

The revised forecast reflects an improved revenue outlook compared with the February estimate.

“A large portion of this improvement is due to higher commodity prices, and these gains are expected to dissipate over the medium term. Overall, gross tax revenue is projected to increase from R2.14 trillion this year to R2.53 trillion in 2029/30,” the Minister told Parliament.

Delivering the Medium-Term Budget Policy Statement (MTBPS), Godongwana said the South African Revenue Service (SARS) continues to strengthen revenue administration and improve compliance.

He added that SARS is playing a key role in government’s efforts to combat the illicit economy, particularly the illegal alcohol and tobacco trades.

“Through customs and excise modernisation, which includes enhanced cargo scanning, track-and-trace capabilities, and stronger frontline enforcement, SARS is disrupting the networks that enable illicit trade.

“We will provide a more detailed update on the National Illicit Economy Disruption Programme in the Budget next year,” the Minister said. –SAnews.gov.za

 

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Government is redirecting spending from consumption to infrastructure investment in an effort to accelerate economic growth, expand productive capacity, and improve public services. 

“Infrastructure is a catalyst for economic growth and remains at the centre of government’s reform agenda. We are shifting spending towards productive investment that expands economic capacity, improves access to essential services and supports employment. Our goal is not simply to spend more, but to spend better.

“Every rand invested must deliver greater economic returns, attract private investment and improve the quality of life of South Africans,” Finance Minister Enoch Godongwana said on Wednesday.

The Infrastructure Finance and Implementation Support Agency (IFISA), announced by Finance Minister Enoch Godongwana in the February Budget, began operating on 1 April 2026.

It supports projects across all spheres of government, with a potential investment value of more than R207 billion.

Godongwana said these projects will help mobilise private capital and expertise, improve risk sharing and bring infrastructure projects to market faster. 

National Treasury said in its Medium-Term Budget Policy Statement (MTBPS) document that the infrastructure reform agenda supports this shift by strengthening the systems used to prepare, manage and deliver projects.

“Improving project preparation and implementation is a priority. This will reduce underspending, accelerate delivery and ensure that infrastructure investment translates into productive assets and better public services.

“Reforms are also under way to mobilise private-sector finance and expertise, augmenting limited fiscal resources and state capacity. These measures will improve the efficiency of infrastructure investment and ensure that it delivers value for money,” Treasury said.

READ | Reform programme: “not abstract policy measures”

Public Private Partnerships 

Government is also fast-tracking the use of Public Private Partnerships (PPP), particularly in municipalities where infrastructure backlogs and service delivery pressures are most severe. 

Of the 68 projects currently in the PPP pipeline, 31 are municipal projects.

“A major milestone has been reached with the submission of the amended Municipal PPP Regulations to Parliament for the required 30-day scrutiny period. This is the final step before implementation,” Godongwana said.

The new regulations will simplify processes, reduce transaction costs and make it easier for municipalities to partner with the private sector to deliver infrastructure and services.
Furthermore, the Budget Facility for Infrastructure (BFI) is delivering results.

“The BFI ensures that scarce public resources are directed to well-prepared, implementation-ready projects. Fiscal support approved through the BFI now stands at more than R100 billion. 

“The infrastructure bond has raised over R14 billion since its inaugural issuance in December 2025. These funds are earmarked for projects in the BFI pipeline,” he said.
Godongwana encouraged more public institutions to make use of the BFI when developing large infrastructure projects. 

“Where additional support is required, IFISA [Infrastructure Finance and Implementation Support Agency] stands ready to assist with project preparation and the development of funding proposals.

“We are already working with institutions in the criminal justice system, in particular the police, to prepare projects for future BFI windows,” he said.

The Minister emphasised that infrastructure delivery is not only about building new assets, saying it’s also about protecting and maintaining the assets we already have.

“Every maintenance project deferred today becomes a larger repair bill tomorrow. Better project selection, stronger implementation capacity, improved asset management and effective partnerships with the private sector will ensure that infrastructure investment translates into faster growth, more jobs and better public services.

“Our task is clear: build faster, maintain better and attract private investment. Above all, we must ensure that every rand invested in infrastructure works harder for the people of South Africa,” he added.

Infrastructure Conditional Grant Review

Godongwana announced that government is reforming the infrastructure grant system to strengthen planning, accountability and oversight. 

This follows the government completing a review of infrastructure grants to provinces and municipalities.

Between 2017/18 and 2023/24, national government transferred R887 billion through infrastructure conditional grants to provinces and municipalities, which the Minister said was a substantial investment.

“The review assessed whether these grants are delivering infrastructure and improving service outcomes. The findings were clear. While most funds are spent, projects are often delayed, incomplete, or fail to deliver the intended benefits. 

“Conditional grants are exactly that, conditional. Funds must be used for their intended purpose and approved projects. Transferred funds must result in completed projects, functional infrastructure and reliable services for communities,” he said. –SAnews.gov.za

 

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National Treasury has set its focus on further reducing South Africa’s debt-to-GDP ratio over the rest of the decade by continuing to grow the primary surplus and narrowing the budget deficit.

This after achieving debt stabilisation at 78.4% of Gross Domestic Product (GDP) in 2025/26.

“Government is on course to achieve these objectives, despite heightened global volatility.

“Lower debt levels will reduce borrowing costs and improve investor sentiment, supporting higher public and private investment, and stronger growth and job creation,” the department’s Medium Term Budget Policy Statement read.

National Treasury noted that the fiscal framework has remained resilient, despite “financial market volatility, heightened economic uncertainty and global price shocks” due to the Middle Eastern conflict.

“Main budget fiscal balances for 2025/26 outperformed 2026 Budget estimates, mainly due to strong revenue collections and lower debt-service costs,” the MTBPS read.

Revenue collection

The 2026/27 estimated tax revenue collection has been revised upward by R17.1 billion, while petroleum royalties are revised up by some R6.8 billion.

Additionally, departmental revenue is also expected to rise by R14.3 billion.

“In total, tax and non-tax revenue and National Revenue Fund receipts are R54.1 billion above the 2026 Budget estimate.

“This outcome will support a pipeline of infrastructure projects approved through the Budget Facility for Infrastructure, alleviate some spending pressures and increase the contingency reserve, mitigating risks to the framework.

“Debt-service costs, as a proportion of main budget revenue, stabilised at 21.3% in 2024/25 and are projected to decline to an average of 20.6% over the MTEF [Medium-Term Expenditure Framework] period, but remain stable as a share of GDP,” the statement read.

Fiscal strategy

Having stabilised the gross debt, intensified attention is aimed at growing the main budget surplus and reducing the debt-to-GDP ratio over the rest of the decade.

Government will:

• Support the economy through prudent fiscal policy and increased capital investment.
• Improve value for money in public spending by conducting programme reviews and implementing their recommendations, while protecting the social wage and directing a growing share of spending towards capital investment.
• Reduce debt-service costs as a share of revenue, while managing debt redemptions.
• Propose a principles-based fiscal anchor to entrench fiscal sustainability.

“The growing primary surplus will ensure that the ratio of gross debt to GDP declines. This will reduce debt-service costs as a share of revenue, opening space for government to allocate more resources to developmental priorities and to build buffers against fiscal shocks.

“The main budget deficit of 3.7% of GDP in the current year is forecast to decline to 2.5% in 2029/30. The narrowing deficit will enable government to better manage maturing debt,” the MTBPS explained.

The department emphasised that improving government’s spending efficiency remains a top priority, “supported by budget reforms, programme reviews and efficiency measures”.

“These efforts have yielded R38.1 billion in targeted and responsible savings that are being redirected to priority spending areas over the MTEF period.

“The Early Retirement Programme aims to rejuvenate the public service and will generate estimated average annual savings of R4.4 billion over the next three years. The findings of government’s ghost worker investigations are being consolidated and will be published in the 2027 Budget,” the MTBPS stated. – SAnews.gov.za

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Government’s commitment to ensure economic progress is bearing fruit. 

The after the past few years has seen the country on the back foot of the effects of state capture, the COVID-19 pandemic, low growth as well as rising expenditure and debt.

This is according to Finance Minister Enoch Godongwana, who delivered the Medium-Term Budget Policy Statement (MTBPS) in Parliament on Wednesday.

Godongwana noted that damage from stringent challenges “demanded that we change course”.

“Government committed itself to move away from fiscal fragility towards one of stable, credible and sustainable public finances. We limited bailouts of state-owned entities, funded new commitments responsibly and prioritised investment over unsustainable consumption. 

“Before this very house, we were honest about the choices before us. We made it clear that government could not fund every demand at once without risking the country’s fiscal future. 

“Today, that commitment is beginning to pay off,” Godongwana told Parliament.

Importantly government began to address debt, ultimately stabilising debt in the 2025/26 financial year. 

“Debt as a percentage of GDP [gross domestic product] is now falling, creating a stronger foundation for investment, growth and job creation. 

“Earlier this year, all three major global credit rating agencies announced positive rating actions on South Africa, despite a challenging global environment.

“The fiscal space created through disciplined budgeting allows us to protect frontline services, preserve the jobs of teachers, doctors and nurses, while protecting the social wage for the most vulnerable,” the Minister stated.

Economic outlook

Godongwana noted that South Africa’s risks to the outlook remain elevated due to various issues.

“A 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,” he stated.

In 2027, growth is expected to bounce to 1.6%, rising to 2% by 2029.

Despite the challenging times, the South African economy has shown resilience backed by fiscal discipline and a lower inflation target, helping to “contain borrowing costs and reduce South Africa’s risk premium”.

“The Rand has strengthened and become less volatile. This reflects the difficult choices we have made to preserve macroeconomic stability and fiscal sustainability. 
“But, growth remains too low,” he acknowledged.

To address that, sharp focus is being placed on implementing structural reforms together with strengthening state capability and delivering public infrastructure.

“This will put the economy on a faster, more sustainable growth trajectory. 

“If we stay the course, growth could exceed 3% per annum,” Godongwana stated.

Fiscal strategy

The Minister stated that South Africa’s fiscal strategy rests on four main pillars, namely: 
•    Supporting growth through prudent fiscal policy and increased capital investment; implementing structural reforms
•    Improving value for money by driving efficiencies, reducing waste and prioritising spending that delivers results; supporting growth-enhancing public infrastructure investment
•    Reducing debt-service costs while managing the debt burden responsibly
•    Embedding fiscal sustainability through a principle-based fiscal anchor

“This strategy remains on course. In fact, it is already yielding results. 

“For the first time in nearly two decades, our debt-to-GDP stabilised at 78.4% of GDP in 2025/26,” the Minister stated.

The primary surplus, where government revenue exceeds non-interest spending, also continues to grow.

“We are increasing it from 1.7 % of GDP this year to nearly 3% by 2030. This will allow us to reduce borrowing, contain debt-service costs and create more space for growth-enhancing investment and essential public services. 

“The budget deficit is also better than we expected in February. 

“It will now narrow to 4.3% of GDP this year compared to the 4.5% forecast at the time of the Budget. By 2030, we see the deficit falling to 2.5% of GDP,” he said.

Ensuring sustainability

The National Treasury describes fiscal sustainability as the ability of the state, under reasonable macroeconomic and fiscal assumptions, to “meet its present and future expenditure and debt-service obligations and to manage its fiscal risks, without undermining macroeconomic stability and without requiring an unrealistically large or abrupt future correction to revenue or expenditure”.

In response to this, Godongwana stated that to safeguard the advances made, government has released the draft fiscal anchor legislation for public comment in October, with the expectation that it will be tabled in Parliament next year.

The anchor is aimed at embedding prudent management of the public finances across administrations.

“The proposed legislation sets out fiscal sustainability as a standard into the Public Finance Management Act instead of a rigid numerical rule.

“It requires each Administration [following every General Election] to commit to its own fiscal objectives, consistent with the electoral mandate. It then reports against it at every Budget and explain any material deviation to Parliament.

“Fiscal sustainability cannot depend on the commitments of a single administration,” the Minister said.

In this regard, the Financial and Fiscal Commission will be responsible for independently reporting on the “consistency of the fiscal framework with the administration’s fiscal plan”.

“This approach preserves flexibility in changing economic conditions while strengthening transparency, accountability and fiscal discipline. 

“Most importantly, it helps to ensure that developmental priorities and constitutional obligations are pursued at a pace that public finances can sustain. 

“That is how we protect our economic future and our constitutional commitments. – SAnews.gov.za

 

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Consumers will breathe a sigh of relief, following Finance Minister Enoch Godongwana’s announcement of a reduction in the general fuel levy.

The Minister made the announcement during the Medium Term Budget Policy Statement (MTBPS) delivered in Parliament on Wednesday.

Fuel increases have put strain on households and businesses, with petrol and diesel costs reaching record highs due to increases in Brent Crude Oil prices triggered by conflict in the Middle East.

“To provide temporary relief, the fuel levy will be reduced by R3 per litre for diesel and R1.50 per litre for petrol from 4 November 2026 up until to 1 December 2026. 

“Thereafter, the relief will continue at a lower amount until 5 January 2027. The diesel levy will be reduced by R1.50 per litre, and the petrol levy by R1 per litre,” Godongwana stated.

These measures are expected to provide R10 billion in support for households and businesses at a fiscal cost of R10 billion in foregone revenue.

The origin is revenue overruns from 2025/26 placed in an appropriation bill to be allocated to the CEF [Central Energy Fund] … It will be surrendered back [to] be used to offset the costs of the fuel levy relief. The cost will be fully accommodated.

“To fund this support, the R10 billion that was transferred to the Central Energy Fund will be returned to the National Revenue Fund to finance this relief.

“This intervention will help to ease cost of living pressures without compromising the sustainability of the budget,” the Minister explained.

Currently, 95 Petrol costs some R30.25 inland and R29.38 at the coast per litre. – SAnews.gov.za

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South Africa’s reform progress continues to record progress, moving from plans to implementation in sectors including electricity, logistics and water, with Finance Minister Enoch Godongwana emphasising the importance of continuing the reform journey.

Government’s reforms programme is aimed at dismantling barriers to investment, economic growth and employment in South Africa.

“The structural reforms are not abstract policy measures. They affect the daily lives of South Africans. Take the water sector, for example. Poorly maintained infrastructure, high water losses and weak municipal capacity have undermined service delivery.

“Government’s response through the National Water Action Plan focuses not only on infrastructure, but on fixing institutions responsible for delivering water services. The priority is to restore operational performance, strengthen governance and technical capacity, reduce water losses, improve revenue collection and reform the way water infrastructure is financed.

“By addressing both infrastructure and institutional weaknesses, we are laying the foundation for reliable water services and stronger local economies,” Godongwana explained.

The Minister was delivering the Medium-Term Budget Policy Statement (MTBPS) in Parliament on Wednesday.

In the MTBPS documents, National Treasury noted the following progress in key sectors this year:
•    Electricity: The wholesale electricity market was launched internally with 32 participants, while Eskom recorded a profit for a second year.
•    Logistics: Transnet recorded a profit in the 2025/26 financial year, while the entity published its Revised Network Statement.
•    Water: The SA National Water Resources Infrastructure Agency (SANWRIA) board and acting CEO was appointed and the WATERCOM was established.
•    Local Government: In September, the Public Service Commission Bill was enacted into law while the eight metro municipalities became part of the Metro Trading Services Reform programme
•    Cities and Housing: Passenger rail journeys increased by five times – up from 17 million in the 2021/22 financial year to 101 million in the 2025/26 financial year.
•    Visas: The Electronic Travel Authorisation programme is now live, reaching 200 000 applications and allowing for 24-hour approvals.

“In energy…the Department of Electricity and Energy has also published policy guidance on the market design and a revised pricing policy. The work to create a fully independent transmission system operator is progressing well.

“Since the establishment of the task team in March 2026, the President has approved its Phase 1 report, and the detailed transaction structure and implementation plan will be delivered in a second report by year end,” Treasury stated.

The next step for the energy sector is to finalise the trading rules and open the wholesale electricity market externally in 2027.

Logistics

In 2027, eleven private train operators will start running on the freight network.

At the same time, Cabinet has approved the “approach to separating out the Transnet National Ports Authority as an independent entity”.

“Alongside this, the Transport Economic Regulator is working to establish the institution’s governance framework, design regulatory systems and build capacity for full functionality in April 2027.

“The Transnet Rail Infrastructure Manager has published the revised rules for private rail operators after industry feedback as new train operating companies prepare for operations from 2027,” Treasury noted.

Addressing the water crisis

To resolve challenges in the water sector, the National Water Crisis Committee was established this year and is tasked with overseeing the implementation of the National Water Action Plan.

“[SANWRIA] will finance and develop national dams and transfer schemes using its own balance sheet.

“The Water Partnerships Office has been incorporated into the Infrastructure Finance and Implementation Support Agency to unlock additional funding for water projects, with a pipeline exceeding R60 billion now in the financing stage of implementation,” the department said.

Rail

Passenger rail reforms continue to gain momentum with passenger journeys rising more than twofold from about 39 million in 2023/24 to 101 million in 2025/26.

“The improvements largely result from signal modernisation, strategic rolling stock replacement and other infrastructure rollouts.

“The Passenger Rail Agency of South Africa is targeting 232 million passenger journeys in 2028/29,” National Treasury said.

The coal face

In its determination to build a capable state, government has placed particular emphasis on reforms to local government.

This includes what the National Treasury described as “stronger action…to address financial mismanagement in municipalities alongside interventions to improve revenue collection”.

“The reforms…institutionalise financial discipline through amendments to the Municipal Finance Management Act [MFMA].

“They…also support improved infrastructure investment and service delivery, through new public-private partnership regulations as well as by incentivising municipalities to reinvest revenue from water, electricity and waste services into the infrastructure for these services,” the department stated.

Additionally, the assent of the Public Service Commission (PSC) Bill in September strengthens the PSC’s ability to monitor, investigate and intervene in municipalities and “separates political interference from administrative duties”.

Furthermore, the White Paper on Local Government will be launched this week and will strengthen the “regulation of service delivery and professionalise senior appointments”.

“These measures form part of a comprehensive reform programme that works at two levels: structural change to local government institutions, finances and legislation, and governance reform to improve how municipalities manage the delivery of basic services,” National Treasury explained.

The local government reform programme is at different stages of maturity.

“The Metro Trading Services Reform Programme and the Smart Meters Grant Programme are in implementation. The White Paper and the Public Service Commission Act are now moving to implementation.

“The local government fiscal framework review, the MFMA review, the Water Services Amendment Bill and digital transformation interventions are in design, drafting or processing,” the department stated. – SAnews.gov.za

 

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