In an ongoing effort to ensure that government manages its finances efficiently, the state is currently consulting on options for a formal fiscal anchor.
This was outlined in the March 2025 discussion document issued by the National Treasury to prevent a recurrence of the cycle of high spending, large deficits, and rising debt.
“Efficiency reforms continue to underpin our broader agenda. We are closing underperforming programmes, eliminating ghost workers through improved payroll systems, and establishing a centralised state-owned entity holding company to strengthen governance.
“Our tax administration continues to improve, with enhanced data systems and compliance measures supporting higher revenue performance,” Finance Deputy Minister, Ashor Sarupen, said on Thursday in Johannesburg.
He was addressing the launch of the Organisation for Economic Cooperation and Development (OECD) research on South Africa’s economy.
The OECD Economic Survey of South Africa is an independent and internationally peer-reviewed assessment of South Africa’s macroeconomic trends, structural reforms, and policy challenges.
It suggested, among the other recommendations, that South Africa introduce stricter spending controls, reinforce spending rules and improve governance and administrative efficiency and reform state-owned enterprises (SOEs) to reduce fiscal transfers.
The Deputy Minister noted the OECD’s recommendations while asserting that South Africa was already working towards achieving sustainable public finances.
“We find strong alignment between our national reform agenda and the OECD Survey’s five priority recommendations for South Africa, which include enhancing fiscal sustainability while promoting inclusive growth, maintaining low and stable inflation, expanding job creation and workforce integration, enabling a just climate transition, and reforming the electricity sector.
“Our commitment to inclusive economic growth and development remains firm, with 61% of non-interest spending being directed toward the social wage.
“Even as baseline spending has been reduced, we have shielded frontline services and protected the most vulnerable, focusing priority support on health, education, and social protection,” the Deputy Minister said.
At the same time, government is investing boldly to drive growth and economic transformation.
Over R1 trillion has been allocated to infrastructure over the medium term, with a focus on energy, transport and water. Inclusive growth also requires labour market integration to spur job creation.
Government is scaling up youth employment programmes, technical training, and informal sector support.
Operation Vulindlela
Furthermore, government launched Phase 2 of Operation Vulindlela as a step toward further accelerating structural reform.
Phase 2 focuses on digital infrastructure, dynamic cities, and improved basic services.
This work complements government’s broader strategy to build a capable state and reduce regulatory and infrastructure bottlenecks – priorities the OECD has rightly emphasised.
Operation Vulindlela is a joint initiative between The Presidency and National Treasury which focuses on accelerating structural reforms to enable economic growth and job creation.
With the OECD’s recommendations to revise municipal funding models and better align electricity revenues with infrastructure investment, the Deputy Minister highlighted work that was already taking place.
“As part of Operation Vulindlela Phase 2, we are working to shift both water and electricity services to a utility model. This will help ensure that municipal services are financially sustainable and better managed.
“A broader review of the local government funding model is also underway to strengthen how infrastructure is funded and delivered at the local level.
“Nowhere is the impact of reform more visible – or more necessary – than in the electricity sector. Load shedding has declined markedly, supported by improvements in generation capacity and the growing participation of the private sector. Investments in embedded generation are rising, and procurement has accelerated, helping to unlock new capacity and diversify the energy mix,” he said.
The operationalisation of the National Transmission Company (NTCSA) marks a major milestone in the unbundling of Eskom.
“It lays the foundation for a more competitive and transparent electricity market. Independent power producers are expanding their footprint. At the same time, we are scaling up investment in the transmission network and addressing long-standing weaknesses in distribution.
“Restoring energy security remains essential to unlocking growth and enabling a just transition. A sentiment echoed by both ourselves and the OECD.
“Looking ahead, we will deepen these reforms by prioritising the full restructuring of Eskom, establishing an independent transmission system operator, and creating a wholesale electricity market under Operation Vulindlela Phase 2,” Sarupen said. –SAnews.gov.za
