Issued by Ismail Joosub on behalf of the FW de Klerk Foundation on 08/05/2025

South Africa’s public finances are in troubled waters. A toxic blend of political gridlock, rising debt and chronic mismanagement has rendered the national budget process increasingly volatile. As Parliament prepares to receive a revised national budget on 21 May 2025, the stakes have rarely been higher. South Africans have endured months of uncertainty, following a failed VAT hike proposal, escalating debt-service costs and another year of ballooning irregular expenditure. With confidence waning in the ability of both the executive and Parliament to provide clear fiscal leadership, it is time to ask: Should South Africa establish an Office for Budget Responsibility?

Recent events point decisively in favour. The February 2025 budget proposal, derailed by internal disputes within the Government of National Unity (“GNU”), laid bare the structural cracks in our fiscal architecture. In particular, the proposed VAT hike from 15% to 17% was met with strong resistance from coalition partners like the Democratic Alliance, which warned of its disproportionate impact on poor households. This impasse delayed the budget’s tabling and sent shockwaves through financial markets. A revised proposal followed, which initially retained a phased 0,5% VAT increase and scrapped inflationary adjustments to income tax brackets. However, even this compromise was ultimately withdrawn after a combination of legal action initiated against the Minister of Finance and mounting pressure from several coalition and opposition parties. The uncertainty has left the economy exposed, with debt-service costs rising to R389,6 billion and public debt projected to peak at 76,2% of GDP by 2026.

Meanwhile, the pattern of waste continues unchecked. In the last fiscal year alone, R49,5 billion in irregular expenditure was recorded (nearly double the figure from the previous year). Key state-owned entities like Eskom and Transnet remain dependent on massive bailouts. Growth remains sluggish, stuck below 1% and revenue shortfalls threaten the very viability of core services. These conditions demand not only policy reform but institutional innovation.

South Africa’s Parliamentary Budget Office (“PBO”), created in 2013 under the Money Bills Amendment Act of 2009, was designed to support Parliament’s fiscal oversight mandate. It provides technical analysis to MPs, prepares briefings on budgetary matters and assists with evaluating revenue and expenditure trends. However, its impact has remained modest. Resource constraints, limited visibility and its close administrative ties to Parliament have hindered its ability to offer authoritative, independent fiscal analysis.

The PBO’s reports, while helpful, are rarely seen by the public or media. Parliament’s compressed budget timeline also means its work often comes too late to shape decisions meaningfully. Moreover, the PBO cannot certify budgets or force government departments to provide data. It remains a supportive structure for legislators, not an institutional watchdog.

Contrast this with the United Kingdom’s Office for Budget Responsibility (“OBR”), widely recognised as a gold standard for independent fiscal oversight. Established in 2010 and placed on a statutory footing in 2011, the OBR produces official economic forecasts, assesses the government’s performance against fiscal rules and evaluates long-term sustainability risks. Critically, UK law requires the government to base its budget on OBR forecasts or publicly explain any deviation.

Unlike the PBO, the OBR is institutionally independent. Its leadership is appointed with cross-party oversight, its outputs are designed for public scrutiny and its existence ensures that governments cannot game their own fiscal assumptions. Over time, the OBR has become a trusted anchor for public and investor confidence.

South Africa urgently needs a similar institution. Fortunately, our Constitution already offers the foundation for it. Section 215 requires that the budget process promotes transparency, accountability and effective financial management. Section 216 mandates uniform norms for financial control. The Public Finance Management Act of 1999 (“PFMA”) reinforces these values, obliging government institutions to ensure sound stewardship of public funds.

Parliament also has a clear duty under sections 55 and 77 of the Constitution to oversee the budget process. The Money Bills Amendment Act of 2009 gave Parliament the power to amend fiscal proposals. However, the last decade has shown that without an independent institution to scrutinise the economic assumptions underpinning those proposals, Parliament’s powers are hamstrung.

An Office for Budget Responsibility, properly designed, could fill this gap. It should be a statutory body, independent of both Parliament and the executive and mandated to:

• Produce economic and fiscal forecasts used in the national budget and medium-term framework,
• Assess government performance against fiscal targets, including debt ceilings or deficit reduction plans,
• Publish fiscal sustainability and risk reports, identifying long-term structural concerns,
• Cost significant policy proposals on request by Parliament,
• Provide transparent reports accessible to the public, civil society and media.

This OBR must be legally guaranteed access to all necessary data from National Treasury, SARS and other departments. Its forecasts should be publicly released and tabled in Parliament. Its leadership must be appointed through a transparent, multiparty process, with terms long enough to ensure stability and independence.

The OBR would not replace the PBO or Auditor-General. Rather, it would complement them. The PBO would remain Parliament’s internal adviser, while the OBR serves the public interest more broadly by shedding light on the credibility of national fiscal policy. The Auditor-General, in turn, audits how money was spent. The OBR would focus on whether the government’s fiscal plans are sustainable and responsible in the first place.

Importantly, this proposal does not require a constitutional amendment. A new Act of Parliament (new legislation) or a substantial amendment to the Money Bills Amendment Act of 2009 could establish the OBR with clear powers, duties and protections. Such a step would align South Africa with over 50 countries that have adopted fiscal councils or budget responsibility offices, including Canada, South Korea and Kenya.

This is not about weakening the Treasury or limiting government discretion. It is about ensuring that every budget rests on sound numbers, honest forecasts and credible plans. In a country where public confidence in financial governance is low, an OBR could restore some trust in the system.

The 21 May budget presents an opportunity. South Africa can either continue down a path of reactive firefighting and political contestation, or it can use this moment to strengthen its institutions. An Office for Budget Responsibility would not make difficult fiscal choices easier, but it would make them clearer. And clarity, in public finance, is power.

It is time to act. South Africa’s fiscal credibility depends on it.