The National Treasury has introduced a new budget mechanism that aims to identify and cut underperforming or low-priority government programmes so that it can rein in spending and ensure that SA’s limited public resources go to meet its most pressing needs.
The new targeted and responsible savings (Tars) mechanism went public on Wednesday as the Treasury took the first steps to craft the new 2026 medium-term budget framework — just as the contested 2025 budget was finally on its way to gaining parliamentary approval.
The programmes identified by Tars for cutting will be announced by the finance minister in his medium-term budget later this year.
Tars is part of a comprehensive suite of reforms to the budget process outlined in the 2026 medium-term expenditure framework technical guidelines, which Treasury released on Wednesday. It traditionally releases the medium-term guidelines midyear, ahead of October’s medium-term budget policy review, to provide direction for government departments and public entities as they apply for their budget allocations for the next three years.
The new budget round comes after a turbulent few months in which finance minister Enoch Godongwana twice failed to get the government of national unity to support his budgets. His third, May 21 budget is going through its final stages in parliament, with all 10 parties to the GNU having approved the Appropriation Bill on Wednesday.
Godongwana has committed to implementing a more consultative budget process in future, as well as to attaining the spending efficiencies the DA and the Treasury have urged. But the sweeping changes to the process outlined in the latest guidelines go back to April 2024, when the Treasury initiated a review of the budget process. SA’s current budget process had not kept pace with the country’s evolving fiscal, institutional and political realities, and the review had shown critical limitations that the budget reforms would seek to address, it said.
“The reforms embedded in this document — ranging from baseline efficiency reviews to digital integration — signal a deliberate move away from incremental budgeting towards a system that is more strategic, transparent and results-driven,” it said, adding that the reforms aimed to ‘restore fiscal discipline”, reallocate resources to high-impact programmes and improve service delivery.
Tars will review spending and use technology to eliminate “double dipping” in social grants and programmes such as the community works programme. The Treasury is using AI to conduct an annual audit of ghost workers and payroll irregularities. Tars will update proposals to rationalise public entities and departments, and tackle the public sector wage bill.
The Treasury and departments would collaborate to select and rank programmes for Tars, with final approval by the cabinet. After being reviewed, smaller programmes would start being shut down immediately while larger ones would phase out from 2026/27. The cabinet might choose to retain some programmes as long as they enhanced efficiency — or to redirect funds.
The Treasury said fiscal objectives as set out in the 2025 budget to stabilise the debt-to-GDP ratio, achieve a primary surplus, expand infrastructure investment and support the social wage, would continue into the 2026 budget.
It made it clear that additions to public spending would be considered only for “priority interventions”, and only if fiscal space had been created by Tars.
Any windfall revenues would be used to “improve fiscal sustainability” or address temporary needs such as infrastructure investment, not to fund permanent increases in spending.
The guidelines emphasised that “compensation budgets must remain within the limits set in the 2025 budget” and took a tough line on salary increases, saying these must be aligned with the public service wage bill management strategy.
Talks are also under way with public sector unions on a legal mechanism that will allow the state to provide incentives for eligible employees, the document said. One innovation is that the cabinet will now be more involved in signing off various stages of the budget process.
As a first step in the reforms, the guidelines and accompanying budget calendar have been formally approved by the cabinet. The calendar suggests finance minister Enoch Godongwana’s medium-term budget could be tabled as late as November this year.
The principles for the 2026 medium-term expenditure framework included “using targeted and responsible savings to create fiscal space for key priorities set out in the medium-term development plan”, the Treasury said in the document.
“The guidelines outline the economic environment under which the 2026 medium-term expenditure framework is formulated, signal recommendations from the review that will be implemented and incorporate lessons learnt from the 2025 budget cycle,” it said in a statement.
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