Politburo statement on the budget and associated medium-term expenditure framework
SACP Communications
South African Communist Party
Politburo statement on the budget and associated medium-term expenditure framework
Saturday, 28 February 2026:- The Political Bureau of the South African Communist Party (SACP) is holding its two-day Lekgotla in Johannesburg, starting on Friday, 27 February 2026. The meeting has received a political input presented by the General Secretary Solly Mapaila. It has discussed a wide range of economic, political, social and international developments and is still in session. The meeting will conclude late on Saturday, 28 February 2026.
This statement communicates the key outcomes on the budget tabled to Parliament and the nation on Wednesday, 25 February 2025, by the Minister of Finance, Enoch Godongwana, and the associated medium-term expenditure framework. A separate statement focusing on other key outcomes will follow in due course.
Failure of the budget to support industrialisation, large-scale employment creation and proactive agricultural land acquisition and redistribution major concerns for the SACP and the working class at large
While the budget speech does not, indeed, appear at first sight as if it is driving austerity, and there is average annual medium-term expenditure framework growth for budget allocations in a number of economic classifications and expenditure items, this has to be obvious in the context of recently improved tax collection. The average annual medium-term expenditure framework growth rates, although welcome where they apply compared to austerity in its outright intransigence, are, as a critical examination of the full budget review will reveal, nominal, insignificant or underwhelming. That is, they fall far short of what is required to address the multiple crises we face. These crises include the long-term unemployment crisis, poverty crisis and extreme levels of racialised, gendered and spatialised inequality, including under-development in rural areas and in both the semi-periphery and periphery of major metropolitan areas. It is important to underline that in our country, the long-term and structural character of the unemployment crisis also affects a significant proportion of college and university graduates with higher certificates, diplomas, advanced diplomas, bachelor’s degrees, honours degrees and master’s degrees.
In particular, the SACP is deeply concerned that under the economic classification of Industrialisation and exports, there is a negative average annual medium-term expenditure growth rate for Economic development and incentives (-1.4 per cent). Over the next three years, up to 31 March 2029, if this path is not altered, this trajectory will seriously impede industrialisation and associated large-scale employment creation. The negative average annual medium-term expenditure framework growth translates into a decline in government investment into or government spending in pursuit of industrialisation and associated large-scale employment creation. This cannot be good news.
Besides, the average annual medium-term expenditure framework growth curtailment contradicting the commitment made by President Cyril Ramaphosa during the State of the Nation Address and debates regarding the need for South Africa to develop a comprehensive industrial policy to drive industrialisation, our country continues to face de-industrialisation. This is indicated by manufacturing closures and a decline in manufacturing contribution to overall national output and employment. A decline in government spending negatively affecting industrialisation, and thereby associated employment creation, cannot halt the long-term de-industrialisation wave, nor can it deliver re-industrialisation and associated large-scale industrial employment creation.
What is required is positive, and for that matter significant, average annual medium-term expenditure framework growth for industrialisation and associated large-scale employment creation. This must support a comprehensive, high-impact industrial policy to stop the de-industrialisation wave and drive both re-industrialisation and associated large-scale industrial employment creation.
In the same way, the negative annual medium-term expenditure framework growth for the Agricultural Land Holding Account (-0.1 per cent) must be a cause for concern. If this facility forms part of measures to transform agricultural land ownership and to redress the results of past racial prejudices, it must be supported by adequate investment in proactive acquisition, management and redistribution of agricultural land. This, in the context where the Agricultural Land Holding Account must be well managed to be highly impactful, must form part of the wider national imperative. It should contribute to building and expanding access to productive work to tackle unemployment.
Re-industrialisation, agricultural land ownership transformation, redistribution and productive support, and associated employment creation, also require a supportive monetary policy, including developmental or moderate interest rates rather than high interest rates. In this regard, the South African Reserve Bank must play a developmental role. The Cabinet must review macro-economic policy, both fiscal and monetary policies, to stop de-industrialisation, re-industrialise our economy and create large-scale employment to bring down unemployment, poverty and inequality. Towards these economic policy goals, the SACP calls for a review of the budget trajectory.
Fruitless and wasteful spending
The SACP calls for decisive action against fruitless and wasteful expenditure.
The Auditor General’s consolidated audit outcomes, as reflected in the February 2026 Budget Review, reveal a crisis of financial governance across all three spheres of government. Fruitless and wasteful expenditure continues to drain public resources that should be directed towards healthcare, education, housing, public transport and decent work. There can be no doubt that maladministration, corruption and theft of public funds are part of the factors underpinning fruitless and wasteful spending.
At national level, fruitless and wasteful expenditure in the period under review is no less than R2.1 billion. This includes avoidable interest on overdue accounts, penalties for late payments and abandoned projects left incomplete, and legal costs arising from administrative failures. The funds lost as a result of fruitless and wasteful expenditure have delivered no public value. The money has not built any school. It did not equip a hospital or a clinic. It did not create productive work for a single worker.
At provincial level, fruitless and wasteful expenditure is no less than R3.4 billion. The bulk of this arises from departments of health, education and public works. These are the very departments that should serve the working class and poor communities. Instead of strengthening frontline services, billions are squandered through tenderisation, which is privatisation, and associated reckless procurement, litigation due to maladministration, and non-compliance with prescripts and due processes.
At the municipal level, fruitless and wasteful expenditures also surpass the billion-rand threshold. Municipalities continue to incur avoidable penalties, interest on overdue bulk service payments, payments for undelivered goods and services, and costs linked to unlawful or irregular tenders. In many municipalities, weak internal controls and political interference in procurement processes remain entrenched.
Across the three spheres, fruitless and wasteful expenditure is no less than R7.4 billion. This minimum figure reflects only what has been disclosed and audited. The real scale of fruitless and wasteful expenditure is probably higher where records are incomplete, unreliable, deliberately obscured or destroyed.
Sky-rocketing irregular expenditure
The SACP therefore calls for increased zero-tolerance approach to systemic irregular expenditure and enforced consequence management and insourcing of all unnecessarily outsourced public functions. Repeated deviations from prescripts and due processes must trigger automatic investigations and disciplinary processes or criminal cases where evidence of deliberate wrongdoing is established.
It is a fact: besides fruitless and wasteful expenditure, the SACP is gravely concerned about the scale of irregular expenditure across all spheres of government, which exceeds R60 billion, while unauthorised expenditure is also in the billions.
Irregular expenditure does not automatically mean that funds have been lost. In some instances, value for money may have been realised, but prescribed procedures, regulatory requirements or due processes were not followed. However, when irregular expenditure becomes systemic, structural and skyrocketing, it signals profoundly wrong practices within the machinery of the state.
Persistent and escalating irregular expenditure implies entrenched weaknesses, most of which are rooted in tenders and tender corruption, including deliberate manipulation of procurement processes, political interference, poor oversight and a culture of impunity. These erode transparency and create fertile ground for corruption, patronage networks and the capture of public institutions through tenderisation, tenders and contract variations.
Even where no immediate financial loss can be proven, systemic irregular expenditure destroys public confidence, distorts priorities and weakens the developmental capacity of the state. If left unattended, it will normalise non-compliance. It will shift governance from rules-based administration to discretion driven decision making, often influenced by private interests.
The working class cannot be told that there is no money for healthcare, education, housing and public transport while tens of billions of rands are trapped in irregular processes and billions more are spent without authorisation. A developmental state cannot be built on procedural decay, governance shortcuts and procurement manipulation.
Systemic irregular and unauthorised expenditure are not a technical glitch. It is a warning sign of institutional erosion. It must be confronted decisively and rooted out without fear or favour.
Neo-liberal orientation of structural reforms
While the structural reforms adopted by the National Treasury in 2019, drawn from the imperialist, Washington-based International Monetary Fund- and World Bank-backed Going for Growth: Economic Policy Reforms prescribed in 2017 by the Paris-based Organisation for Economic Co-operation and Development, are presented as though they are separate from fiscal consolidation, the reality is that they are part and parcel of the same agenda.
The austerity imposed under the fiscal consolidation linked with the structural reforms agenda has been promoted through the notion of debt-to-gross domestic product ratio stabilisation and reduction, by driving liberalisation measures that bring in private capitalist wealth accumulation and competition in key network infrastructure sectors such as electricity generation and transmission, rail, ports and water. This liberalisation to “bring in private sector participation and competition” in these sectors constitutes a new form of privatisation that does not involve the sale of the targeted infrastructure or network sector but opens it up to their exploitation against the growth and expansion of the state-owned enterprises. The agenda includes directly stopping, curtailing or replacing increased government investment, recapitalisation and expansion of the affected state-owned enterprises, which have historically operated in these sectors, to hand over the role they could play through their growth and expansion to private capitalist interests.
Therefore, instead of decisively recapitalising and strengthening public entities to drive developmental transformation, the state has increasingly shifted towards creating space for private capital, often justified on the basis that “government has no money”. This narrative, however, collapses under scrutiny.
It reveals a deeper neo-liberal ideological orientation that elevates market mechanisms and private wealth accumulation over democratic public ownership, going against the Freedom Charter, and developmental state leadership. The consolidation of these reforms under the banner of “Operation Vulindlela”, now in its new phase, confirms this trajectory. What is presented as pragmatic reform to unlock growth in practice advances a restructuring of the state’s role in favour of private capital in core infrastructure sectors.
Fiscal consolidation, liberalisation and austerity are therefore not separate strands of policy. They are interconnected elements of a single macro-economic orientation that constrains public investment, limits expansion of state capacity and opens strategic infrastructure to intensified private exploitation and wealth accumulation.
It is important for the working class to recall, however, that in the telecommunication infrastructure sector, the neo-liberal structural reforms agenda involved the old form of privatisation through the auctioning of the high radio-frequency spectrum. This strategic national productive asset has since been privatised to the highest bidders, consolidating the duopoly of Vodacom and MTN rather than achieving the de-monopolisation claimed as the purpose of the privatisation.
The SACP has rejected the neo-liberal trajectory, however it is disguised, packaged or rationalised. South Africa’s network industries must serve developmental transformation, industrialisation and the overwhelming majority of the people, being the working class, in line with the ownership principles of monopoly industry as set out in the Freedom Charter, as opposed to being reformed to serve as new frontiers for private profit extraction.
Austerity under continued fiscal consolidation
While, on the face of it, the budget speech appears as though the budget is not an austerity budget, the reality is that austerity, under the strategy of fiscal consolidation, continues. It includes, among other measures, the agenda to cut the public-sector wage bill and reduce the size of the public service, leaving it smaller and burdened with numerous vacancies through a variety of mechanisms, including early retirement schemes and recruitment moratoriums.
In the same vein, the R8.4 billion cut in spending on the public transport network subsidy is part and parcel of austerity under continued fiscal consolidation, which the National Treasury seeks to further institutionalise or entrench through the so-called fiscal anchors. This budget cut will result in increased transport fares for affected workers and unemployed commuters who depend on low-cost, subsidised transport, in a country where there are many workers who spend at least one-third of their wages on transport. Under this austerity agenda, the National Treasury offers no alternative funding to build and ensure immediate access to an affordable, safe, reliable and integrated public transport system, including in rural and other areas where there are no effective and efficient passenger rail services.
The working class must rise against austerity, however it is framed or designed. For its part, the SACP will strengthen its capacity as part of this struggle.
SACP denounces the budget for blocking the advance to quality healthcare for all by depriving the National Health Insurance of funding for immediate, decisive and full implementation
The SACP is deeply concerned that the budget does not allocate funds for the immediate, decisive and full implementation of the National Health Insurance, NHI. Depriving the NHI of funding forms part of a negative, capital-driven ideological reaction to the NHI and of the strategy of fiscal consolidation under which the National Treasury has implemented austerity. In particular, capitalist private-sector-controlled and financially administered medical aid schemes and other segments of finance capital constitute the core class forces opposed to the NHI.
These capitalist private-sector-controlled and financially administered medical aid schemes seek to continue exploiting those with medical aid cover through exorbitant monthly premiums, including by cutting essential day-to-day healthcare cover and reducing it to insignificant savings that are exhausted by the first half of the year, leaving those affected without day-to-day cover for the remainder of the year. As a result, many of those with medical aid cover are forced to make out-of-pocket payments for the essential day-to-day healthcare consultations and medicines.
Without the allocation of funds for the immediate, decisive and complete implementation of the NHI by legally activating the NHI fund as a necessary precondition for rolling out the NHI, South Africa will continue with the unjust two-tier healthcare system: one for the minority of the rich and well off, around 15 to 16 per cent of the over 63 million-strong national population, who can afford access to exorbitant private healthcare, and the other being the underfunded, under-resourced, overcrowded and overwhelmed public healthcare clinics and hospitals, including those that are dilapidated or falling apart in many respects. These facilities are characterised by long daily queues and lengthy waiting lists, resulting in patients’ health deteriorating and others even dying while on those critical-care waiting lists.
The SACP reiterates its call to progressive organisations and communities to unite and campaign for NHI funding and for its full, immediate and decisive implementation. This requires a rolling mass action and the intensification of the campaign on all fronts. In addition, this widest possible working-class unity must confront and defeat right-wing opposition to, including litigation against, the NHI.
National security and defence
In delivering the Budget Speech, Minister Godongwana said: “To support this and other efforts to intensify law and order, spending on peace and security increases from R268.2 billion in 2025/26 to R291.2 billion in 2028/29.” This means the roughly R23 billion increase is spread over three years. In this regard, the question is whether it is sufficient to address the challenges of under-capacity in peace and security, given the negative impact that austerity has had on these areas over the years. The same question applies to the R2.7 billion added to defence, also spread over the next three years, given the negative impact that austerity has had on defence capacity and, therefore, on national security.
The SACP is calling for this budgeting trajectory to be re-examined in favour of stronger and more capable defence capacity and national security, in the face of a global environment that has increasingly become hostile and technology intensive in the areas of defence, security, peace and crime-fighting. Its review must include greater emphasis on domestic innovation, research and development, and production in the defence, security and crime-fighting sectors.
People’s Red Caravan in Ixopo, Zamafuthi Village
From 16 to 22 February, the SACP was stationed in Ixopo in the Moses Mabhida province of the SACP, KwaZulu Natal, as part of our programme to promote community self-reliance and community solidarity among the people. The People’s Red Caravan is the SACP’s flagship programme to build socialism from the ground up. The PRC aims to ensure community self-reliance and tackle poverty from its source which is food production. Its intention is to ensure household-based employment, household-based income generation and household-based food production. As it is usual in the work of the People’s Red Caravan, as the Party we practically relocated our head office and all of our operations to the community where the caravan is stationed for the duration of its stationing. The PRC in Moses Mabhida was one of the most successful and most impactful of the activations we have had thus far.
Among other achievements, the Ixopo Zamafuthi PRC, in the stream of food production, planted 20,000 spinach seedlings, 53 avocado trees, 8000 potato seedlings, 150 kg of seedlings of beans and fertilised the communal land as well as installed a sprinkler irrigation system over the 1.5 hectares of land. The community, working through PRC, built a chicken coop and placed 400 poultry birds for egg production. The PRC has started a bee farming programme in the community. There is now a functional and productive beehive, and we are working with our in-house bee farming expert to train more beekeepers going forward. The PRC has worked with the community and those already active in household production to create a mutually beneficial system of aggregation to create more value and diversify production, over and above the communal farms established through the PRC. As part of creating more value for the producers, the PRC has secured a milling machine for the benefit of the community to be used for processing of maize and other crops or other kinds of produce.
The food production work stream, among other work streams of the PRC, is the pillar stream as it addresses the most urgent of the challenges facing the working class; poverty and hunger. As part of infrastructure development work stream of the PRC, a number of arterial roads have been graded to improve accessibility to the village. In the same stream, the PRC successfully connected a communal tap for drinking water.
The SACP has implemented five PRC activations so far and will implement three more to finish the national activations.
The work of the Moses Mabhida PRC activation was not concluded, and our teams remain to finish some of the work with the understanding that the community are owners of projects and ultimately bear the responsibility to sustain and protect its future. We call on communities to join us and work with us in confronting challenges of the people directly to fight hunger and poverty in the spirit of self-reliance and solidarity.