Minister of Finance, Enoch Godongwana presented his fifth Medium Term Budget Policy Statement (MTBPS) on Wednesday. It was a much easier presentation than the previous five years, when the aftershocks of the COVID-19 pandemic could be felt in the ballooning national debt and a runaway debt-to-GDP ratio. Debt is expected to stabilise this year and debt service costs are forecast to fall for the first time in years, but growth and job creation will remain muted.Subscribe

The normal sleight-of-hand couldn’t disguise the weak growth forecast: Godongwana described the forecast growth of 1.2% in 2025 as being “more than double the economic growth in 2024” but neglected to add that this was revised down from the 2025 budget forecast of 1.4%.

To be fair to the National Treasury and Godongwana, this MTBPS recognises the need for higher growth and healthier job creation. Its solution – to shift to a lower inflation-targeting environment, with lower GDP growth and revenue collection in the short term – will strain an already frayed relationship with labour stakeholders. Its decision to bolster fiscal consolidation through greater private-sector participation and centralisation of public spending will please opposition parties in the GNU and international partners but will alienate the ANC’s partners in the tripartite alliance.

This MTBPS is a recognition, albeit tacitly, that local government and state-owned enterprises have been bleeding the fiscus white, wasting billions of rands earmarked for infrastructure development and economic growth.

We have written previously about the hundreds of millions of rands returned to the Treasury by the metros in just one fiscal year. Tucked away in the second half of Godongwana’s speech are plans to reform the Municipal Infrastructure Grant (MIG) by giving control of capital spending to the Development Bank of Southern Africa (DBSA) and the Municipal Infrastructure Support Agency (MISA).

There is also a push for more public-private partnerships (PPPs), with the June 2025 amendments to PPP regulations set to be extended to local government by 2026. The Department of Transport will issue its first request for proposal (RFP) for rail freight logistics by December, with more RFPs to follow early in 2026.

There are similar proposals and projects in the pipeline for water and electricity transmission infrastructure. Treasury is also piloting a utility reform programme for water and electricity services across municipalities in Mpumalanga.

The language used in this year’s MTBPS and Budget reveal a government which is much more receptive, even friendly, to private-sector involvement in critical infrastructure. This reflects the influence of the ANC’s partners in the GNU, including the Freedom Front Plus (FF+) who specifically called for “the establishment of an implementation agency to solicit public-private partnerships” as one of its conditions for supporting the ANC provincial government in the Northern Cape.

If these initiatives are successful, and they appear to have the full backing of national government, one indirect outcome may be an easing of the pressure the ANC faces in the build-up to next year’s local government election, where years of local government failures threaten the party’s control of municipalities across the country. The irony of rescuing local government by neutering it is apparent. Those on the losing side of these reforms, including corrupt civil servants in local and provincial government, may have little recourse but could still try and sabotage the process.

The ANC-led government has undertaken these reforms because it has run out of other options, and the ANC no longer has absolute control of fiscal and monetary policy. The next few Budgets will be leaner and a bit meaner, with greater control from the centre over spending. The question remains: when will fiscal policy start working for more South Africans?