Over the medium term, government will anchor its economic growth strategy on four key areas in order to support inclusive growth.
This as Finance Minister Enoch Godongwana announced in the Medium Term Budget Policy Statement (MTBPS) speech that economic growth projections have been revised down from 1.3% to 1.1%.
Godongwana delivered the MTBPS speech in Parliament on Wednesday.
"[Our] fiscal strategy sets to out to achieve the fiscal sustainability needed to support inclusive economic growth.
"It carefully weighs competing demands, making the necessary trade-offs between what is most urgent and what must wait given the fiscal constraints. The strategy also supports critical social services and addresses the significant fiscal and economic risks that lie ahead," he said.
The four key pillars are:
- Maintaining macroeconomic stability
- Implementing structural reforms
- Building state capability
- Supporting growth-enhancing public infrastructure investment.
"Pillar one is about a stable, transparent and predictable macroeconomic framework that creates a conducive environment for businesses and households to save, spend, invest and grow.
"The National Treasury has the responsibility for oversight and implementation of the macroeconomic policy framework. Anchoring inflation expectations is important for our macroeconomic policy framework, and this what the Reserve Bank is responsible for.
"To strengthen this framework, we continue to work on assessing the suitability of monetary policy targets, and to improve the levers of macroeconomic policy coordination," Minister Godongwana said.
The second pillar is aimed at the implementation of structural reforms and accelerating Operation Vulindlela.
"These will continue to strengthen the economy to be more productive and internationally competitive, accelerate inclusive economic growth and foster much-needed job creation.
"The first phase of Operation Vulindlela provides tangible evidence that structural reforms can reduce economic bottlenecks. It also demonstrates that government can collaborate effectively with business for the collective good," he said.
In terms of supporting growth-enhancing infrastructure, Godongwana said this is about "effective infrastructure investment, to boost economic activity and enable higher growth over the medium term".
"In this regard, we are implementing reforms that will create conditions to attract greater private sector participation. The reforms include mobilising significant private sector financing and technical expertise to augment the limited public sector capacity and capability.
"We are amending the PPP [Public Private Partnership] regulations to simplify requirements for undertaking these projects. The amended Treasury Regulation 16 will be published before the end of November for implementation in 2025/26. The Municipal PPP Regulations 309 will be finalised by June next year.
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"We are establishing dedicated capacity to plan, prepare and design programmes that will generate a credible pipeline of projects that can be taken to the market," he said.
Pillar four, according to the Minister, seeks to "build a capable state that delivers a reasonable and reliable standard of public service that will foster the necessary environment for more growth and jobs".
"For this reason, additional funding is proposed for Parliament and the Office of the Chief Justice, mostly to enhance operational capacity in the running of these important institutions. With the Local Government Elections due in 2026, funds have been set for the Independent Electoral Commission to conduct smooth elections.
"Additional funding for the South African Revenue Service is proposed. This is to help the organisation build on its successes by driving programmes to enhance the efficiency of revenue collection, whilst enhancing compliance and facilitating legitimate trade," he said.
