The National Treasury, seeking to rein in runaway spending by government departments and public entities, has introduced a radical new set of budget guidelines that will keep them on a much tighter leash.
It described the 2026 medium-term expenditure framework (MTEF), unveiled this week, as representing “an important shift in how South Africa plans, prioritises, and allocates public resources”.
“Grounded in the lessons of previous budget cycles and the outcomes of the budget reform project, these guidelines are designed not only to enhance procedural compliance but to elevate the quality and credibility of budget submissions across government.”
Under the proposed new budgeting process, each national department and its public entities must motivate requests for budget allocations in detail and explain how the money will be strategic to its programmes.
The guidelines stipulate that the primary budget submission of a national department must be submitted by its accounting officer with a signed covering letter confirming that the submission reflects that department’s strategic direction.
“A comprehensive submission, covering all the expenditure proposed for appropriation for a vote, including transfers to institutions and other spheres of government within the budget vote, is required.
“Grounded in the lessons of previous budget cycles and the outcomes of the budget reform project, these guidelines are designed not only to enhance procedural compliance but to elevate the quality and credibility of budget submissions across government.”
Departments are called upon to treat these guidelines as more than a set of instructions. They reflect cabinet’s expectations, the public’s demand for better governance, and a shared national commitment to making every rand count
— MTEF document
On Wednesday, deputy finance minister David Masondo sounded the alarm on future budgets being delayed by political disagreements.
Speaking during the debate on the Appropriations Bill, he said that if departments ran out of money, spending on key service delivery commitments such as health, education, early childhood development and social grants would screech to a halt.
The bill is the final step in approving the national budget, and allocates funds to national government departments once ministers have tabled their budget votes.
It was passed after a last-minute deal between the ANC and its GNU partner, the DA, which included the sacking of the minister of higher education & training, Nobuhle Nkabane.
Masondo said approval of the bill would now allow the government to spend R1.2-trillion on basic services. Failure to reach agreement would have risked departments completely running out of funds by October.
“We must not delay the passing of this bill or object to it,” Masondo said.
“In the absence of the Appropriations Act, the government may only spend 45% of the previous year’s budget until the end of July, which is next week. And thereafter, the government can only spend 10% per month of the previously appropriated budget.”
He said failure to pass the bill would have implications for newly presented spending items, including R6.7bn for compensation and essential services in health to hire 800 doctors, R400m for the home affairs digitisation programme, money to address shortages of medical goods, and R5.1bn for education compensation and early childhood development.
“The second implication of delays in passing this budget is that critical priorities, new priorities, cannot be funded. These priorities include the R4bn for infrastructure for passenger rail transport to modernise signalling technology systems that will improve service, frequency, safety and efficiency.”
For the first time in 30 years, the budget took three attempts to pass in parliament. It faced stiff resistance both inside and outside the government of national unity due to a proposed VAT hike of two percentage points.
Finance minister Enoch Godongwana tried to table it again in March with a lower VAT hike proposal, but this was also rejected and challenged in court on procedural grounds.
The budget was finally approved in May, with a fuel levy hike accepted instead of a rise in VAT.
According to the proposed MTEF guidelines, the Treasury would — in line with the government’s commitment to identify spending that is wasteful, inefficient, underperforming and low priority — ensure a more streamlined and effective allocation of resources through a “targeted and responsible savings” process.
It has committed to re-examining the more than 200 spending reviews that have been done over the past 20 years, with a view to implementing some of the suggested savings proposals.
The guidelines seek to eliminate abuse of social grant payments and eliminate ghost workers from the government payroll.
Also on the cards is a review and possible rationalisation of departments and public entities, finding savings in the public sector wage bill through a personnel expenditure review undertaken by the department of public service & administration, and an extended review of remuneration in public entities.
Joe Maswanganyi, chair of the standing committee on finance, told Business Times on Friday that while the committee looked forward to engaging the Treasury on the MTEF, the guidelines had yet to be finalised and taken through the cabinet process.
“National Treasury has not yet come to parliament to table those measures. So it is up until that time in a quarterly briefing, which they will do in September, when they will table them. That is when we can comment on them. For now, it is the purview of the executive.”
The guideline document said its reforms signal a deliberate move away from an “incremental budgeting” system to one that is “more strategic, transparent, and results-driven”.
“Importantly, these reforms are not abstract exercises. They are intended to restore fiscal discipline, reallocate limited resources towards high-impact programmes, and ultimately improve service delivery to South Africans,” the Treasury said.
“Departments are called upon to treat these guidelines as more than a set of instructions. They reflect cabinet’s expectations, the public’s demand for better governance, and a shared national commitment to making every rand count. Accounting officers, CFOs and programme teams must lead this transformation with diligence, integrity, and urgency.
“An endorsement letter from the accounting officer of the executive department must be submitted.”
It said selected departments participating in pilot programmes for gender responsive budgeting, science, technology and innovation and climate budget tagging “must include in their submission a paragraph on the reallocation to these priorities and the policy imperative being addressed”.
Remarking on the delays in passing this year’s budget, Songezo Zibi, leader of Rise Mzansi and chair of the standing committee on public accounts, said the Treasury should expect that its budgets will frequently be interrogated and even be rigorously challenged under the GNU.
“This is the new normal. We must internalise it and accept it. If we don’t, we are deluding ourselves. This is going to be the case for the budget, and it may be the case with various pieces of legislation in the future.”
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