Source: Government of South Africa
With the Southern African region experiencing a growing number of climate-related disasters, government says it will increase its focus on reducing the fiscal and human cost of disasters by planning for them instead of reacting to them.
“When disasters strike, government is forced to reallocate funds from other priorities to respond, often at the cost of long-term development. This cycle of crisis and reallocation is unsustainable,” the Deputy Minister of Finance, Ashor Sarupen, said on Tuesday in Parliament.
Through the finalisation and publishing of a National Disaster Risk Financing Strategy in the 2025/26 financial year, government’s strategy will shift from reactive funding to proactive, planned disaster risk management.
The strategy will:
- Introduce disaster risk financing instruments, including climate insurance products, to improve response time and predictability of funding;
- Embed disaster risk management in grant frameworks, particularly those for infrastructure and local government, and
- Support line departments and municipalities in mainstreaming climate risk into their financial planning and investment decisions.
“Climate change is not a future threat. It is a present reality, and our budget frameworks must reflect that,” Sarupen said while tabling the National Treasury’s Budget Vote.
Spending for Growth
As part of National Treasury’s broader macroeconomic framework reforms to drive structural economic transformation and attract investment, public infrastructure spending will exceed R1 trillion over three years.
“This represents the fastest-growing area of government expenditure and is aimed at easing supply-side economic constraints and improving social service access.
“The Budget Facility for Infrastructure (BFI) is being reconfigured to attract private sector participation through multiple appraisal windows, separated investment and financing decisions, and diversified financing instruments including guarantees, build-operate-transfer structures, and concessional loans,” the Deputy Minister said.
New public-private partnership (PPP) regulations, effective 1 June 2025, have reduced procedural complexity, with supporting frameworks for unsolicited proposals and fiscal commitments to be published soon, while municipal PPP regulations will be finalised before the Medium-Term Budget Policy Statement.
“A single National Treasury-overseen structure will be established this year to systematically crowd-in private sector finance and expertise, consolidating large-scale project preparation, providing PPP technical support, improving data management, and enhancing private sector engagement,” he said.
Rebuilding local government finances
In an effort to address service delivery breakdowns, fiscal mismanagement, and governance failures at municipalities, National Treasury is responding with targeted support and structural financial reforms.
National Treasury’s approach focuses on the following key areas:
- Adoption of Funded Budgets: Municipalities can no longer adopt unfunded budgets based on wishful projections. Treasury is enforcing the requirement for credible, funded budgets as the basis of municipal financial planning.
- Revenue Value Chain Reforms: Treasury is supporting municipalities to improve billing systems, strengthen collection rates, and protect revenue integrity. Without this, no budget can be sustainable.
- Capacity Building: Through direct technical support, Treasury is building the financial management skills of municipal officials, particularly CFOs and budget managers.
- Financial Recovery Plans: For municipalities in financial distress, Municipal Financial Recovery Services (MFRS) provide tailored recovery plans. These are not generic interventions, they are grounded in the real financial position of each municipality.
- mSCOA Implementation: The Municipal Standard Chart of Accounts (mSCOA) brings transparency and uniformity to local government finances. It allows us to compare apples with apples — across municipalities, across provinces, and across time.
- Consequence Management: Treasury is working closely with the Department of Co-operative Governance and Traditional Affairs (CoGTA) and the Auditor-General South Africa (AGSA) to ensure that financial misconduct is addressed swiftly. Public money must be protected. Where there is wrongdoing, there must be consequences.
Reforming the auditing profession
After years of audit failures in both the public and private sectors, National Treasury is currently reviewing the Auditing Profession Act.
The Act provides for the establishment of the Independent Regulatory Board for Auditors; the education, training and professional development of registered auditors; the accreditation of professional bodies; the registration of auditors, and the regulation of the conduct of registered auditors.
“The proposed amendments are designed to strengthen the Independent Regulatory Board for Auditors (IRBA) and align our regulatory framework with international best practice. These reforms are not just technical changes; they are about fostering trust, integrity, and public confidence in the profession. The auditing profession plays a critical role in financial markets and public accountability,” the Deputy Minister said. – SAnews.gov.za
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