Digital instruments to enhance financial supervision slated for South Africa's 2026 budget plan
In a bid to address longstanding budget process challenges, the South African government has unveiled key actionable reforms outlined in the 2026 Medium-Term Expenditure Framework (MTEF) Technical Guidelines. These reforms aim to improve coordination, transparency, and alignment between policy goals and budget allocations, while fostering long-term fiscal sustainability and better service delivery.
The reforms include:
- Targeted and Responsible Savings (TARS): This approach will create fiscal space for key national priorities by cutting inefficiencies and reallocating resources to impactful programmes.
- Improving Decision-making and Consensus: The reforms aim to address fragmented decision-making and weak consensus by establishing clearer priorities and trade-offs in the context of limited fiscal space.
- Enhancing Policy-Budget Alignment: The goal is to ensure funding allocations closely reflect intended policy outcomes, enhancing programme effectiveness and accountability.
- Transparency and Data-Driven Management: Measures include using technology to detect and eliminate duplicate social grant payments and reduce payroll irregularities, annual audits focused on ghost workers, personnel expenditure reviews, and rationalization of public entities and departments to streamline government.
- Moving to a Strategic, Results-Driven Budget System: The government plans to move away from incremental budgeting towards a more strategic, results-driven, and integrated digital budget system.
- Commitment to Fiscal Discipline: The reforms are grounded in macroeconomic stability, infrastructure investment, state capability enhancement, and economic reforms.
These reforms collectively aim to reduce waste, enforce fiscal discipline, and ensure limited resources are focused on interventions that provide the greatest impact for South Africans. They reflect a government-wide commitment endorsed by Cabinet to modernize and enhance South Africa’s budget and expenditure framework.
Other notable reforms include the extended review of public entities remuneration, the personnel expenditure review completed by the Department of Public Service and Administration (DPSA), and an annual audit of ghost workers and payroll irregularities. The fiscal objectives set in the 2025 budget, such as stabilizing the debt-to-GDP ratio, achieving a primary surplus, expanding infrastructure investment, and supporting social wage, will continue into the 2026 budget.
The guidelines reaffirm the government's commitment to supporting South Africa's long-term fiscal objectives and national development priorities. The guidelines were issued in terms of Section 27(3) of the Public Finance Management Act (PFMA), which requires the National Treasury to prescribe the format in which an annual budget must be prepared.
The Medium-Term Expenditure Framework (MTEF) Technical Guidelines 2026 have been issued, outlining these key actionable reforms. The outcomes of new sectoral reviews, such as the Active Labour Market Policy (ALMP), will be considered in the 2026 MTEF. The use of technology will be employed to eliminate double dipping in social grants and other programs, such as the community works program.
In summary, the South African government has committed to a more disciplined, transparent, and strategically aligned budget process, aiming to improve service delivery and foster long-term fiscal sustainability. These reforms are a significant step towards addressing the critical limitations of the current budget process, including fragmented decision-making, poor policy-budget alignment, and weak consensus on trade-offs.
The South African government's reforms, as outlined in the 2026 Medium-Term Expenditure Framework (MTEF) Technical Guidelines, aim to leverage technology for improved transparency and data-driven management, such as the elimination of duplicate social grant payments and payroll irregularities. These reforms also prioritize enhancing policy-budget alignment, utilizing a results-driven digital budget system to focus limited resources on interventions with the greatest impact. Moreover, the government's commitment to fiscal discipline extends to strategies like targeted and responsible savings and the extended review of public entities remuneration, all with the goal of reducing waste and ensuring better service delivery.
