Govt economic reforms ‘align’ with OECD report – Treasury

He responded to a new report by the Organisation for Economic Co-operation and Development (OECD), released by the National Treasury, just days after GDP figures showed sluggish growth in the first quarter.

The OECD’s latest economic survey, released on Thursday, noted that South Africa’s economy remains weak, with job creation still a significant challenge.

It urged the country to lower its inflation target to help stimulate growth.

To tackle unemployment, the OECD said it is “key to prioritise reforms easing barriers to business dynamism and improving workers’ abilities to reach employment opportunities”.

Sarupen said the government remained committed to maintaining macroeconomic stability through prudent fiscal management, debt stabilisation, and policies that boost investor confidence.

"We are accelerating structural reforms to remove barriers to inclusive growth, enhance competitiveness, and unlock private sector investment across key sectors of the economy," he added.

"We are striving to rebuild state capacity by strengthening institutions, improving governance, and ensuring the effective delivery of public services to all South Africans.

"And finally, to lay the foundation for long-term growth, we are prioritising investment in public infrastructure that expands access, boosts productivity, and crowds in private sector participation."

He explained that the reforms introduced under the new government of national unity (GNU) are already beginning to reflect in the country’s economic performance.

"We find strong alignment between our national reform agenda and the OECD survey’s five priority recommendations for South Africa, which include enhancing fiscal sustainability while promoting inclusive growth, maintaining low and stable inflation, expanding job creation and workforce integration, enabling a just climate transition, and reforming the electricity sector."

Sarupen welcomed the OECD’s recommendations to improve fiscal governance, saying the government is already acting on several fronts.

"We, as government, are currently consulting on options for a formal fiscal anchor, outlined in the March 2025 discussion document, to prevent a recurrence of the cycle of high spending, large deficits, and rising debt."

"Efficiency reforms continue to underpin our broader agenda. We are closing underperforming programmes, eliminating ghost workers through improved payroll systems, and establishing a centralised state-owned entity holding company to strengthen governance.

"Our tax administration continues to improve, with enhanced data systems and compliance measures supporting higher revenue performance."

He also highlighted the state's focus on protecting the poor while driving economic transformation.

"Our commitment to inclusive economic growth and development remains firm, with 61 per cent of non-interest spending directed toward the social wage.

"Even as baseline spending has been reduced, we have shielded frontline services and protected the most vulnerable, focusing priority support on health, education, and social protection.

"At the same time, we are investing boldly to drive growth and economic transformation. Over R1 trillion has been allocated to infrastructure over the medium term, with a focus on energy, transport, and water.

"Inclusive growth also requires labour market integration to spur job creation. Government is scaling up youth employment programmes, technical training, and informal sector support."

Sarupen also noted progress in the second phase of Operation Vulindlela, the government’s flagship structural reform programme.

"With a focus on digital infrastructure, dynamic cities, and improved basic services, this work complements our broader strategy to build a capable state and reduce regulatory and infrastructure bottlenecks, priorities the OECD has rightly emphasised.

"We note the OECD’s recommendations to revise municipal funding models and better align electricity revenues with infrastructure investment. Government is already taking steps in this direction."

He said the government is working to shift key services to a more sustainable utility model.

"As part of Operation Vulindlela Phase 2, we are working to shift both water and electricity services to a utility model. This will help ensure that municipal services are financially sustainable and better managed.

 "A broader review of the local government funding model is also underway to strengthen how infrastructure is funded and delivered at the local level."

Sarupen said the reforms are already making a difference on the energy front.

"Nowhere is the impact of reform more visible – or more necessary – than in the electricity sector.

'Load shedding has declined markedly, supported by improvements in generation capacity and the growing participation of the private sector.

"Investments in embedded generation are rising, and procurement has accelerated, helping to unlock new capacity and diversify the energy mix," said Sarupen.

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