Budget targets R12bn in savings as Treasury moves to trim wage bill

The government has identified R12bn in savings over the medium-term expenditure framework (MTEF) through its Targeted and Responsible Savings initiative, finance minister Enoch Godongwana said when he presented the 2026 budget in Cape Town on Wednesday afternoon. The savings form part of a broader fiscal consolidation strategy aimed at stabilising debt and sustaining a primary surplus. Consolidated government expenditure amounts to R2.58-trillion in 2025/26 and rises over the MTEF, placing the R12bn in the context of total spending of more than R2.5-trillion a year.

The Treasury says the savings arise from spending reviews, programme reprioritisation and improved targeting, including measures to reduce fraud in the social grants system. The department has not yet disaggregated how much of the R12bn is permanent baseline reductions versus one-off adjustments. As part of efforts to contain the public-sector wage bill, the budget provides R3.7bn over 2025/26 and 2026/27 for an early retirement initiative.

The Treasury projects that the programme will generate savings of R2.6bn in 2026/27. The initiative is intended to reduce headcount in selected departments, with compensation forming one of the largest components of non-interest expenditure. The budget says tighter controls will be introduced over the filling of posts, including centralised payroll functions and employee verification processes.

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Provinces will require approval to fill posts against verified recruitment plans. The Treasury has not yet specified the targeted number of employees expected to exit under the early retirement scheme, the average payout per employee or whether vacated posts will be permanently frozen. The budget also reports progress in auditing the public-sector payroll.

A total of 4,323 suspicious payroll cases have been identified and are under verification. Salaries will be withheld where employees cannot be verified. The audit forms part of broader payroll and headcount reforms, including the standardisation of payroll systems and strengthened employee verification.

The Treasury has not published the total wage value associated with the 4,323 flagged cases. Compensation of employees across national and provincial governments runs into hundreds of billions of rand annually, making the ultimate fiscal impact dependent on the salary levels and duration of irregular payments. Savings are also expected from improved targeting and reduced fraud in the social grants system.

Social protection spending remains a central component of the social wage, which accounts for about 60% of non-interest expenditure. The Treasury has not yet provided a quantified estimate of the portion of the R12bn savings attributable specifically to grant fraud prevention. Measures include enhanced data verification and cross-checking of beneficiary information to reduce irregular payments.

The savings measures underpin a fiscal framework that projects a primary surplus of 0.9% of GDP in 2025/26. Debt is expected to stabilise at 78.9% of GDP in 2025/26 before declining over the medium term.

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