South Africa’s plan to put fiscal discipline on a firmer legal footing is taking shape, with National Treasury releasing draft legislation on Wednesday that would make fiscal sustainability a guiding principle of the country’s public-finance framework.
The draft Public Finance Management and Related Laws Amendment Bill, 2026 was published for public comment in Government Gazette No. 55612 on 21 October 2026, the same day Finance Minister Enoch Godongwana presented the Medium-Term Budget Policy Statement (MTBPS).
The proposed fiscal anchor is intended to make fiscal discipline harder to abandon when political priorities or economic conditions change, without imposing a rigid numerical rule on future administrations. It would establish fiscal sustainability as a statutory principle while allowing each administration to set its own fiscal objectives in line with its electoral mandate.
Godongwana said the legislation was expected to be tabled in Parliament in 2027.
The draft Bill goes well beyond the fiscal anchor. It proposes extensive amendments to the Public Finance Management Act (PFMA), changes to the Money Bills and Related Matters Act and the Financial and Fiscal Commission Act, and an amendment to the Public Audit Act. A separate draft Bill proposes changes to the Municipal Finance Management Act.
How the fiscal anchor would work
The memorandum accompanying the draft legislation explains how the fiscal anchor would work in practice.
A proposed new section 32A of the PFMA would require Cabinet to approve a fiscal plan consistent with fiscal sustainability. The Minister of Finance would be responsible for preparing the plan, advising on it, reporting on its implementation, and implementing it.
Rather than prescribing a fixed debt or deficit target in legislation, the proposed approach would require each administration to commit to its own fiscal objectives, consistent with its electoral mandate. The government would report against these objectives at every Budget and explain any material deviations to Parliament. The plan would provide a basis for assessing budget decisions and the government’s performance against its fiscal commitments.
The draft also proposes changes to the information that must accompany the annual Budget. The Minister would have to table the fiscal framework alongside the Budget, including a debt-sustainability analysis and an indication of the government’s borrowing intentions.
Multi-year budget projections would have to show the debt-to-GDP ratio and debt-servicing costs for each year. The economic assumptions underpinning the analysis – including growth, inflation, and relevant interest rates – would also have to be disclosed, together with sensitivity analyses showing how different economic scenarios could affect debt sustainability.
The requirements would extend to adjustment budgets. When tabling one, the Minister would have to explain how the appropriations were consistent with the fiscal plan.
These provisions would link the fiscal anchor to decisions about government borrowing and expenditure, rather than leave it as a statement of policy intent.
Parliament and the Financial and Fiscal Commission get oversight roles
The draft legislation also proposes a more formal process for scrutinising the government’s fiscal strategy.
Amendments to the Money Bills and Related Matters Act would require the proposed fiscal framework to include a statement demonstrating its consistency with fiscal sustainability and the fiscal plan. Relevant parliamentary committees would have to assess that consistency, report their findings and explain how they had taken the Financial and Fiscal Commission’s report into account.
The committees would also be required to consider the Minister’s performance against the fiscal plan, published budget reviews and medium-term budget policy statements. The proposals would bring the Minister’s performance against the five-year fiscal strategy into the committees’ annual evaluations.
The Financial and Fiscal Commission (FFC) would have a formal role in independently assessing whether the fiscal plan and fiscal framework were consistent with fiscal sustainability. It would also assess whether the fiscal framework and MTBPS aligned with the plan, and whether reporting on the plan’s implementation was adequate. The Commission would be required to publish its report.
Together, these measures are intended to strengthen scrutiny of the government’s fiscal commitments while leaving room to respond to changing economic conditions.
“This approach preserves flexibility in changing economic conditions while strengthening transparency, accountability and fiscal discipline,” Godongwana told Parliament.
The aim, he said, was to ensure that “developmental priorities and constitutional obligations are pursued at a pace that public finances can sustain”.
“That is how we protect our economic future and our constitutional commitments,” he added.
Debt stabilises, but growth remains weak
The fiscal anchor is intended to help safeguard the gains the government says it has made in stabilising the public finances.
Godongwana reported that the debt-to-GDP ratio stabilised at 78.4% in the 2025/26 financial year – the first time in nearly two decades. He said the ratio was now falling, creating a stronger foundation for investment, growth and job creation.
The primary surplus – the amount by which government revenue exceeds spending before interest payments – is projected at 1.7% of GDP this year, rising to nearly 3% by 2030. The budget deficit is expected to narrow to 3.9% of GDP this year, from the 4% forecast in February, and to 2.5% by 2030.
These figures point to continued fiscal consolidation. The growth outlook, however, remains subdued.
Treasury has cut its forecast for real GDP growth in 2026 to 1.2%, from 1.6% projected in February. Growth is expected to reach 1.6% in 2027 and 2% by 2029.
Godongwana attributed the weaker outlook to global pressures, including the conflict in the Middle East and disruptions to oil supplies following the closure of the Strait of Hormuz. Higher food and energy prices and increased borrowing costs are also weighing on the outlook. El Niño and its likely impact on producer costs and output pose another risk.
The Minister said faster implementation of structural reforms, stronger state capability and investment in public infrastructure could put the economy on a faster, more sustainable growth trajectory.
“If we stay the course, growth could exceed 3% per annum,” he said.
Making submissions
The draft legislation is open for public comment until 29 January 2027. Submissions on the Public Finance Management and Related Laws Amendment Bill, 2026, must be sent to PFMAamendments@treasury.gov.za. Comments on the separate Municipal Finance Management Amendment Bill, 2026, must be sent to MFMAComments@treasury.gov.za.
The notice cautions that National Treasury may make the names of people making submissions, as well as their submissions, public. Submissions may also be disclosed in terms of the Promotion of Access to Information Act.
