Johannesburg: 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.
According to South African Government News Agency, Finance Deputy Minister Ashor Sarupen addressed the launch of the Organisation for Economic Cooperation and Development (OECD) research on South Africa’s economy. He highlighted efficiency reforms that are integral to the government’s agenda, including closing underperforming programmes, eliminating ghost workers through improved payroll systems, and establishing a centralised state-owned entity holding company to strengthen governance. The Deputy Minister noted that tax administration improvements, with enhanced data systems and compliance measures, are supporting higher revenue performance.
The OECD Economic Survey of South Africa, an independent and internationally peer-reviewed assessment of South Africa’s macroeconomic trends, structural reforms, and policy challenges, suggested stricter spending controls, reinforced spending rules, improved governance, and administrative efficiency, and reform of state-owned enterprises (SOEs) to reduce fiscal transfers.
Deputy Minister Sarupen acknowledged the OECD’s recommendations and asserted that South Africa is already working towards achieving sustainable public finances. He emphasized alignment between the national reform agenda and the OECD Survey’s five priority recommendations, which include enhancing fiscal sustainability, promoting inclusive growth, maintaining low and stable inflation, expanding job creation and workforce integration, enabling a just climate transition, and reforming the electricity sector. Despite baseline spending reductions, the government remains committed to inclusive economic growth, directing 61% of non-interest spending toward the social wage, focusing on health, education, and social protection.
Furthermore, the government is investing over R1 trillion in infrastructure over the medium term, focusing on energy, transport, and water. It is also scaling up youth employment programmes, technical training, and informal sector support to spur job creation and economic transformation.
Operation Vulindlela’s Phase 2 has been launched to accelerate structural reforms, focusing on digital infrastructure, dynamic cities, and improved basic services. This initiative complements the government’s broader strategy to build a capable state and reduce regulatory and infrastructure bottlenecks, priorities emphasized by the OECD.
The Deputy Minister highlighted ongoing work under Operation Vulindlela Phase 2, including shifting water and electricity services to a utility model to ensure financial sustainability and better management of municipal services. A broader review of the local government funding model is also underway to strengthen infrastructure funding and delivery at the local level.
Improvements in the electricity sector are notable, with a marked decline in load shedding and increased private sector participation. The operationalisation of the National Transmission Company (NTCSA) represents a significant milestone in the unbundling of Eskom, laying the foundation for a more competitive and transparent electricity market. Investment in the transmission network is being scaled up, addressing long-standing distribution weaknesses.
Deputy Minister Sarupen stressed the importance of restoring energy security for growth and a just transition, a sentiment shared by the OECD. Looking ahead, the government plans to deepen reforms by prioritizing the full restructuring of Eskom, establishing an independent transmission system operator, and creating a wholesale electricity market under Operation Vulindlela Phase 2.