Parliament’s two finance committees want the National Treasury and department of social development to produce a comprehensive policy paper on the future of the social relief of distress (SRD) grant and possible options for basic income support before the tabling of the 2026/27 budget.
The policy paper should quantify the fiscal costs and macroeconomic effects of alternative grant values and coverage and set out clear financing options, including progressive tax measures.
The SRD grant was originally introduced as a temporary measure in 2020 during the Covid-19 pandemic and has been extended each year since then.
The standing committee on finance and the National Council of Provinces’ select committee on finance also recommended immediate steps be taken “to improve SRD administration, reduce wrongful exclusions, and ensure that any move towards a more permanent income-support mechanism is accompanied by a credible funding strategy that does not entail disproportionate cuts to other essential social and developmental programmes”.
The recommendations were made in an adopted report on the fiscal framework outlined in the medium-term budget policy statement (MTBPS) tabled in parliament by finance minister Enoch Godongwana earlier this month. The EFF and MK objected to the adoption of the report, which will be considered by the National Assembly on Thursday.
The MTBPS has made financial provision for an extension of the R370/month SRD grant, which is paid to about 8-million people at a cost in the 2025/26 fiscal year of R37,5bn, until March 2027. This is “while proposals are finalised to link the working-age population to skills development and employment programmes”, according to the MTBPS.
Deputy finance minister Ashor Sarupen told committee members on Tuesday that there is technical work under way in the Treasury on the future of the SRD grant, but he does not want to pronounce on its future until this is finalised.
“While the extension of the SRD grant to March 2027 provides short-term certainty, beneficiaries still face uncertainty about longer-term income-support arrangements, and administrative barriers and verification rules are reported to exclude many eligible applicants,” the report said.
The report adopted separately by the standing committee on finance and the select committee on finance noted that the R370/month SRD grant is significantly below the food poverty line of about R760. During public hearings on the MTBPS civil society organisations said the amount of the grant was inadequate to address widespread hunger and poverty,
The report also recommended National Treasury publish, for parliamentary scrutiny, a comprehensive analysis of options for a formal fiscal anchor, including quantitative scenarios that showed the effects of different anchor designs on the primary balance, debt-to-GDP path, debt-service costs and noninterest spending as a share of GDP.
“This should include explicit analysis of what happens to key social and economic functions if noninterest expenditure continues to decline,” the report said.
In a recent written reply to a parliamentary question about the fiscal anchor, Godongwana said that the National Treasury was designing the proposed fiscal anchor in a way that it did not compromise the delivery of social services and to ensure that it embodied flexibilities in the case of crises. Consultations with stakeholders were under way to determine the most suitable fiscal anchor for South Africa.
The proposed anchor, the minister said, would have “clearly defined escape clauses allowing temporary deviation from the anchor when service delivery or social stability would otherwise be compromised”.
One of the committees’ recommendations that that could act as a restraint on the Treasury is one requiring it to submit to parliament, ahead of future borrowing decisions with multilateral and international financial institutions, a summary of proposed loans including the amount, terms, conditionalities, on-lending arrangements and expected fiscal and distributional impacts.
Also recommended is that the National Treasury publish a three-year excise roadmap for alcohol, tobacco and health-related levies. This followed complaints over the hike in excise taxes by the alcohol and tobacco industries, which they said boosted the illegal trade in these products.
The committees recommended that the National Treasury and the Reserve Bank establish a mechanism for regular reporting to parliament on the distributional effects of monetary policy, including impacts on household indebtedness, consumption and labour-market outcomes, “to ensure that the implementation of the revised inflation target supports inclusive and sustainable economic growth”.
On climate-related disasters, the committees noted that the government’s response was often funded through in-year reallocations from other programmes. They called on the Treasury, together with the forestry, fisheries and environment minister, to develop and table options for strengthening fiscal buffers against climate-related and other systemic shocks.
“These options should include the potential creation of a dedicated climate resilience fund, opportunities to leverage international climate finance, and clear criteria for when and how such buffers are drawn down, to reduce the need for disruptive in-year reallocations away from core social and developmental programmes,” the report said.
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