South Africa's public financial management (PFM) system has evolved over the years into a well-established institutional framework that supports budget planning, execution, and oversight. Evidence from the CABRI Budget Practices and Procedures (BPP) 2025 Survey indicates that South Africa's PFM system is institutionally mature, with strong foundations in budget transparency, documentation, and parliamentary oversight supported by a well-established legislative research function. Concurrently, the survey points to some areas for continued attention, including comparatively less consistent engagement through the Public Accounts Committee, suggesting that legislative follow-through on audit findings remains uneven despite the country's robust transparency and accountability framework.

Importantly, the technical architecture of South Africa's budgeting system has remained largely unchanged in recent years. Instead, the most significant shift has occurred in the broader political environment within which the budget system operates. As coalition politics and evolving political dynamics have become more prominent, budget decision-making has become increasingly negotiation-driven, requiring greater consultation, consensus-building, and coordination among political and institutional actors before budgets are finalised and tabled.

For nearly three decades following the 1994 democratic transition, South Africa’s PFM architecture operated under a predictable political landscape. Budgeting relied heavily on incremental allocation - a system where existing department baselines were automatically carried forward and slightly adjusted each year.

However, slow economic growth over the past decade has eroded the viability of this model. Coupled with the historic shift toward a coalition government, the country’s budgeting system faced a major turning point: how to manage finite resources when political parties no longer share a single vision for fiscal policy.

1. The Political & Economic Shock to PFM

South Africa’s democratic PFM framework was originally designed to rebuild a fractured nation. Thirty years later, stagnant economic growth meant that incremental budgeting was no longer feasible.

The introduction of multi-party governance brought varied political agendas into Cabinet and Parliament.

• Differing Economic Approaches: Coalition partners often clash over fundamental principles. While some advocate strict debt containment and balancing the debt-to-GDP ratio, others argue that debt stabilisation cannot take priority over urgent service delivery challenges.
• Initial Expectations vs. Reality: Inclusion of coalition parties in Cabinet was expected to streamline agreement on fiscal strategy. In practice, fierce debate and friction led to multiple tabling during the 2025 budget process.

These political and economic pressures made one thing clear: the budget process had to adapt rapidly to survive multi-party politics.

2. Fast-Tracking Reform: Consultation as a Tool for Stability

To navigate friction within the coalition, National Treasury fast-tracked structural budget reforms centered around broader consultation and fiscal socialisation. If key stakeholders, both inside the executive and across civil society, do not understand or buy into the fiscal strategy, implementation stalls.

Key Institutional Adjustments Made:

• Socialisation of Fiscal Strategy: Fiscal policy is no longer treated as a purely technical document drafted behind closed doors. Extensive briefings and consultations are now held across political lines to build consensus early.
• Cabinet Endorsement of MTEF Guidelines: To prevent late-stage pushback, the Cabinet now formally approves the Medium-Term Expenditure Framework (MTEF) Technical Guidelines and budget calendar before departments make their budget submissions.
• Digitisation of the Budget Calendar: The entire process is now digitised, establishing strict milestones and clear visibility into each stage of budget preparation for all participating parties.
• Institutionalising Public Engagement: Public participation has shifted from a "nice-to-have" civic exercise into a crucial mechanism to legitimise hard spending choices under coalition governance.

3. Targeted & Responsible Savings (TARS): Looking Inward

With a rigid fiscal envelope, departments can no longer simply demand more funding for new mandates. The Treasury introduced the Targeted and Responsible Savings (TARS) initiative, anchored by the Programme Assessment Matrix (PAM).

The Mindset Shift: Departments are required to use PAM to evaluate their existing allocations before requesting fresh funding. Instead of asking "What can the national budget do for us?" departments must ask "What can we reprioritise within our existing baseline?"