Initial response to the Medium-Term Budget Policy Statement, to be followed a detailed responses to the bills tabled by the Minister of Finance
SACP Communications
South African Communist Party
Initial response to the Medium-Term Budget Policy Statement, to be followed a detailed responses to the bills tabled by the Minister of Finance
Wednesday, 12 November 2025: - The South African Communist Party (SACP) issues this statement as its initial response to the 2025 Medium-Term Budget Policy Statement tabled by the Minister of Finance, Enoch Godongwana, to Parliament in Cape Town on Wednesday, 12 November 2025.
This is a decisive moment in which the working class and its progressive allies must expand their unity and strengthen their capacity to confront the underlying contradictions of the South African political economy and what has become the class-nature of our state. The ideological claims of “binding constraints”, privatisation in network infrastructure, such electricity generation and transmission, freight and passenger rail, water and the ports, and fiscal-monetary “discipline”, to name but a few, cannot be understood in isolation from the principal class interests they serve in terms of economic ownership, management control and wealth accumulation.
Neo-liberalism, the state and accumulation by dispossession
The policy statement reflects the logic of neo-liberalism as a distinct phase of capitalist development. Neo-liberalism in this sense is neither an accidental deviation nor simply a set of policy preferences. It represents a structural response by capital to the falling rate of profit, the exhaustion of the post-war boom, the economic crises of the 1970s up to the present, and shifts in global accumulation regimes, including the tendency towards opening up the state to convert it into a field of profit making and maximisation competition by private wealth accumulation interests. This is among the underlying class-oriented reasons why the minister has been promoting privatisation in network infrastructure and has vociferously defended tenders when he tabled the Medium-Term Budget Policy Statement.
Meanwhile, as South Africans, we know from bitter experience that tenderisation of the state and tenders are a breeding ground for corruption, state capture and, among others, the murders discussed at the commission of inquiry and parliamentary ad-hoc committee probing the infiltration of law enforcement authorities and capture of certain elements within these authorities by criminal networks. Also, such practices commodify public goods and entrench a parasitic layer of comprador capital that thrives on extracting value from the state. This had led to compradorial policymaking.
The adoption of privatisation, deregulation, financialisation, austerity under the notions of fiscal consolidation and fiscal discipline, and “crowding-in” of private capital can be understood, following the critical scholarly works, as accumulation by dispossession: the conversion of public wealth into private rents, the restructuring of social reproduction to serve profit, the embedding of commodification and financialisation into every sphere of life.
The dominant sections of the capitalist class, together with those segments of the state that are compradorially aligned with international finance capital and its domestic counterparts within those sections, is advancing a policy package that extends privatisation into industries which, as the Freedom Charter clearly declares, should be owned by the people as a whole. Given the current context, such collective ownership can only be realised through the state acting as the custodian of public property rights in pursuit of the Freedom Charter’s clarion call, “The people shall share in the country’s wealth”.
Any deviation from the Freedom Charter’s principles represents a betrayal of its vision of democratic control in the year of its 70th anniversary. This weakens the capacity of the public sector and binds social policy to the private wealth accumulation imperatives of monopoly capital, with the dominance of finance capital. This is not a technocratic policy problem but a class political project in favour of the tiny minority of the capitalist elements who stand to benefit from ownership, management control and wealth accumulation.
Austerity, fiscal-monetary “discipline” and public investment
The minister’s emphasis on stabilising public debt, delivering a primary surplus and deploying instruments to “crowd-in” private investment in the targeted logistics and infrastructure networks that belonged to the state, with operations under state-owned enterprises, reveals a shift from any pretence of expansive developmental fiscal policy to one of fiscal austerity under the notions of fiscal consolidation and fiscal discipline. The austerity logic embedded in the statement is incompatible with a transformation agenda that requires strong commitment to public property rights and the turnaround and expansion of the publicly-owned economy to thrive as a key source of revenue to support redistribution and structural economic transformation.
The announcement of the new inflation-target regime of 3 per cent, with a 1 per cent upper “tolerance” band or ceiling, signals a U-turn from the statement by the minister issued on 1 August 2025, in which he asserted that is the National Executive rather than the Reserve Bank that sets monetary policy. What this reveals is that the logic of finance capital has prevailed through the aegis of the Reserve Bank. Contrary to the assertion the minister made, the Reserve Bank has clearly come out as effectively setting monetary policy and the minister merely rubber-stamping it.
While the Reserve Bank’s announcement of a 3 per cent inflation target on 31 July 2025 appeared to fall within the already controversial 3 to 6 per cent band, what the minister has effectively rubber-stamped is even worse. He explicitly endorsed the removal of the flexibility, although it was itself limited by the controversial aspects of the target, previously provided by the upper 4 to 6 per cent range. This has further tightened the straitjacket of monetary orthodoxy at a time when the economy demands expansionary measures.
When it was adopted under the auspices of the neo-liberal Growth, Employment and Redistribution (GEAR) strategy, the controversy surrounding the 3 to 6 per cent inflation band arose, among other reasons, from the waves of deindustrialisation and persistent crisis-high unemployment rates that demanded expansionary interventions, including moderate interest rates. For example, unemployment by the official definition that excludes discouraged work seekers rose from below 20 per cent in 1995 to the crisis-high minimum levels above 20 per cent since 1996 after the adoption GEAR, which failed to achieve its stated targets of 6 per cent growth and employment creation for 400,000 workers by 2000. With GEAR’s and subsequent neo-liberal fundamentals entrenched, unemployment worsened to exceed 30 per cent excluding discouraged work seekers. At 42.4 per cent at present, affecting 12.5 million workers, unemployment by the expanded definition that accounts for discouraged work seekers is far worse than the official unemployment rate.
The rubber-stamped narrow policy on inflation targeting is not a result of a neutral technical decision. The workers have seen how the inflation targeting regime is used to curtail wage increases, meet the wealth accumulation demands of interest-bearing finance capital, strengthens creditor claims, constrain public expenditure through austerity under the notions of fiscal consolidation and fiscal discipline and privilege “stability” over monetary policy support for productive investment in pursuit of the right of all to work through industrialisation as a key driver of large-scale employment creation.
The narrow policy of high interest rates inflation targeting regime
While both the Reserve Bank and the Minister have avoided explaining how they intend to achieve the new inflation target, experience teaches us that their policy instrument hinges on a high interest rates regime and raising interest rates. This has devastating consequences for economic as well as social development. High interest rates suffocate the economy. They discourage stimulating productive investment and crush workers, households, co-operatives and small enterprises. Under this monetary policy regime, families are forced to pay more for mortgages, vehicles and essential loans, diminishing their capacity to meet daily needs. Co-prohibitive. The result is prolonged stagnation and the perpetuation of high rates of mass unemployment, poverty and inequality despite negligible reductions at times.
The high-interest-rate policy serves not the needs of society but the accumulation agenda of finance capital. It protects the tiny minority of the beneficiary class that profits from debt while the majority and government resources suffer its burdens. Enterprises respond by retrenching workers, the state diverts scarce resources from communities to debt servicing and manufacturing continues to de-industrialise. The economy is throttled, living standards fall and inequality widens.
South Africa requires a fundamentally different monetary policy approach, one that, together with fiscal and trade policy, confronts deindustrialisation, unemployment, poverty and inequality directly. This is the policy framework required to support a genuine, high-impact industrial policy and meaningful infrastructure development, in contrast to the repeated annual pronouncements of billions here and trillions there which have failed to materialise in practice. Despite the rhetoric, we have not witnessed the emergence of new, large-scale new nationwide infrastructure capable of transforming production, creating employment at scale and reversing the deep patterns of uneven development that continue to scar our society.
Privatisation, reform of network industries and the developmental state
The policy’s focus on “big-bang” reforms in electricity, ports, water, logistics and municipal delivery is cast in the language of “removing bottlenecks” and “enhancing efficiency”. But from robust scrutiny based on class analysis, such reforms insinuate private capital into public infrastructure and are primarily anchored in the interest-bearing finance capital’s agenda to make and maximise profits, including by shifting risk on to the public purse and enabling rent extraction.
The logic of “crowding-in” private investment via credit guarantee vehicles and unsolicited bids is the logic of privatisation dressed as public-private partnership. A developmental state cannot emerge by deepening the reach of interest-bearing private capital into strategic areas of state assets and operations. As the Freedom Charter’s economic clauses regarding ownership transformation underline, South Africa needs thriving public ownership and democratic control. As opposed to bringing the tiny minority of capitalist class into the targeted network infrastructure and operations, framing it as the inclusion of society, it is worker and community ownership and, above all, ownership by the people as a whole in line with the Freedom Charter that represent the inclusion of the majority.
Social protection, grants and the working class
The statement’s proposals for “targeted savings” in social grants, the scaling down of public transport subsidies and others called under-performing programmes, and conditions tied to relief, reflect the pressure on the social wage. For example, scaling down public transport subsidies will immediately lead to higher transport fares, placing additional pressure on workers’ already strained wages in what remains the most unequal country among over 130 countries the world over. Such measures will erode workers’ real incomes, deepen social inequality and make it more expensive for unemployed workers to look for work.
It is crucial to uncover the real causes of what is termed underperformance, rather than scaling down vital programmes such as public transport subsidies in a country that still lacks an integrated, reliable, safe and affordable public transport system. In this sector, for example, austerity, combined with the corrupt practices that have accompanied the tenderisation of public functions, has severely undermined a number of public transport entities in provinces. These policies have weakened their capacity to serve working people and have deepened the crisis of mobility that entrenches inequality and spatial injustice. This must be rolled back instead of being accelerated.
The SACP and other working-class organisations have correctly called for the expansion of the social wage, improvement and transformation of the Social Relief of Distress Grant into a universal income grant and stronger investment in public employment programmes. The MTBPS turns the logic of relief and rights into logic of market-mediation, commoditisation and fiscal anchors to underpin the pursuit of austerity under the notions of fiscal-monetary “discipline” and consolidation.
A counter-programme for transformation
In line with the SACP’s earlier critique of growth and inclusion (GAIN) or the Same aGAIN and the monetary policy statement calling for macro-economic policy change, we are calling for the following.
- Legislative amendments to add industrialisation, maximum sustainable employment and moderate interest rates to support these policy goals to the explicit mandate of the Reserve Bank.
- Fiscal policy oriented to a developmental compact: mobilise domestic resources through more progressive taxation, wealth tax, capital gains taxes, clamp down on illicit financial flows and capital flight, prioritisation of finance for adequate public investment expansion, protect social spending floors and pursue the elimination of mass unemployment.
- Strategic, high-impact industrial policy led by the state, including democratic control network infrastructure under thriving state-owned enterprises.
- Transparency and public participation in macro-economic policy formulation, democratic accountability to the people as a whole coupled with binding parliamentary oversight of monetary and fiscal policy.
The 2025 Medium-Term Budget Policy Statement is a clear moment of transition. It signals a deeper entrenchment of the neo-liberal policy regime in South Africa under the veneer of “structural reforms” and “efficiency”. It weakens the state’s capacity to act in the interests of the working class – the majority of the people, deepens the power of finance capital and narrows the horizon of transformation.
One of the most glaring weaknesses in the current situation is the absence of an effective and functioning Alliance, both in practice and in policy consultation. Instead, coalition politics and elite pacts appear to have taken precedence, sidelining the Alliance’s unifying strategy, the national democratic revolution, and weakening its capacity to shape a coherent, people-centred developmental path.
The SACP will continue mobilising, educating and organising to shift the terrain. A democratic developmental state with its own capacity to serve the people as a whole with an orientation to the needs of the majority, being the working class, remains both necessary and possible, but this cannot be achieved without the widest possible working-class unity to confront the class basis of the policy regime now being entrenched.