Treasury issues MTEF technical guidelines

Sunday, June 23, 2024

National Treasury (NT) has issued the Medium-Term Expenditure Framework (MTEF) Technical Guidelines for 2025.

The guidelines are issued to assist departments at both national government and other state institutions to prepare medium term estimates for 2025 budget.

National Treasury said the 2024 Budget sought to balance stabilising “public finances and reduce fiscal and economic risks while promoting economic growth and supporting vulnerable members of society”.

“The 2025 Budget will see a debt-stabilising primary surplus achieved in 2025/26, a reduction in the fiscal deficit to pre-COVID-19 levels, and a stabilisation of debt-service costs as a percentage of revenue. A lower debt burden allows the government to redirect resources to important social expenditure and will lower borrowing costs for households and businesses.

“Resources will be available only within the parameters required to meet the objectives of the medium-term fiscal strategy as outlined in the 2024 Budget Review. In this regard, should the economic outlook remain the same, no additions will be made to the overall envelope. In instances where spending may be accommodated by unforeseen or higher-than-expected revenues, permanent increases to spending will be avoided,” Treasury said in a statement.

It added that spending institutions and government department pressures must be “funded from current baselines and programmes that have not delivered their expected outcomes, or through reprioritisation, either within the department’s or public entity’s budget, or from other departments’ or public entities’ budgets”.

The department added that government was seized with enhancing “fiscal credibility and ensure continued transparency and accountability in the management of public finances”.

“The National Treasury has recognised the need for a comprehensive review of the budget process with the objective to identify and implement reforms that will enhance the efficiency, transparency, and effectiveness of the budget process.

“These guidelines are issued while the review is at its initial stages, and it is anticipated that implementation will begin in the 2026 MTEF,” Treasury said.

The department emphasised that while the new administration “bring its own perspectives and policies”, in the meanwhile, “it is crucial to maintain the current fiscal strategy, which aims to stabilise public finances, and ensure sustainable and inclusive economic growth”.

“The current fiscal strategy includes a reconfiguration of the Budget Facility for Infrastructure (BFI) to further expand the pipeline of projects and to test alternative financing and funding models separate from the normal budget process.

“The intention is to use government’s resources more efficiently to leverage financing from the private sector, as well as development and international finance institutions. In this way, limited public resources can catalyse more funding, capacity and capability to fast-track infrastructure provision and improve its effectiveness,” Treasury said. –