South Africa's 2025 Medium-Term Budget Policy Statement avoided new bailouts for struggling state-owned enterprises like Eskom and Transnet, emphasizing reforms instead. Economists highlight the urgent need for restructuring to achieve efficiency gains and address mounting municipal debts. While Eskom reports its first profit in eight years, persistent challenges in local government finances threaten fiscal stability.
In the latest Medium-Term Budget Policy Statement (MTBPS), South Africa's National Treasury refrained from allocating further bailouts to state-owned enterprises (SOEs), focusing instead on restructuring amid fiscal pressures. Economist Sanisha Packirisamy from Momentum noted that the country oversees more than 700 state entities, exceeding most peer economies, presenting opportunities for efficiency and savings through reform.
Eskom and Transnet, plagued by mismanagement, have long strained national resources. According to the 2025 OECD Economic Survey, nearly R310-billion has been spent since the 2008/9 financial year to recapitalize SOEs, equivalent to about 27% of GDP. Packirisamy warned: “Persistent financial fragility of SOEs has required repeated bailouts, diverting scarce funds from growth-enhancing spending. Local government finances are similarly strained... Without decisive reform... fiscal consolidation risks being undermined.”
The budget includes R80-billion for Eskom to cover R38-billion in debt due in April 2026, with no funds for Transnet. Eskom's three-year R230-billion support ends in March 2026, leaving R10-billion for 2028/29. The utility posted a R16-billion profit for the first time in eight years, improving electricity supply. Chairperson Mteto Nyati stated: “The next drive is energy affordability,” while calling for policy changes to level the playing field against private traders.
However, municipal debt remains a major issue, exceeding R100-billion in September 2025 and projected to surpass R300-billion by 2030 without improvements. Arrears rose from R55.3-billion to R94.6-billion by March 2025, despite a debt-relief program since March 2023. Only 24 municipalities qualified for partial write-offs, while 47 remained in default as of May 2025. New measures include smart prepaid metering and distribution agency agreements, where Eskom would manage services temporarily to enforce cost-reflective tariffs and collections.
Economist Casey Sprake from Anchor Capital pointed to additional pressures from liabilities like the Road Accident Fund (RAF). Bank of America analyst Tatonga Rusike highlighted Eskom's CCC and Transnet's B credit ratings, underscoring default risks. The MTBPS stresses these steps to stabilize cash flows and support broader fiscal consolidation.