The overarching theme of last week’s Budget was definitely the fiscal turning point that has now finally been reached. Debt is being stabilised and the trajectory of the deficit is narrowing, allowing the National Treasury to avert new taxes and revert to providing inflationary relief to taxpayers.

The two main underlying stories of the Budget, however, are moves to shift the composition of spending and to begin introducing structures that could start improving the quality of spending.

On composition, Finance Minister Enoch Godongwana confirmed that capital payments would be the fastest-growing item of government expenditure over the coming three years. The Budget shows that payments for capital assets will grow by nearly 10% over the period, compared with growth of 4.4% for employee compensation.

It was also announced that infrastructure spending by the public sector would total R1.07-trillion over the period and that efforts would continue to be made to attract private investment into infrastructure.

The infrastructure investments by the public sector will be distributed across the three spheres of government, as well as public entities and State-owned companies, with more than 54%, or R577.4-billion, to be executed by State-owned companies and public entities.

To further mobilise spending on large capital projects, much more emphasis is also being given to the Budget Facility for Infrastructure (BFI), which has been reconfigured to run quarterly rather than yearly application windows. Through the BFI, public institutions are able to submit proposals for strategic economic and social infrastructure that face funding gaps absent such funding.

In parallel, the National Treasury is positioning infrastructure as an investable asset class, having issued an infrastructure bond in 2025 and raising R11.8-billion to support BFI-approved projects.

This is all before separate efforts to mobilise private sector participation in areas such as electricity and freight logistics, as well as to stimulate public-private partnerships (PPPs). Besides PPP regulatory changes, the Infrastructure Finance and Implementation Support Agency has been set up to support PPP mobilisation, and the pipeline for such projects has already expanded to 63 projects.

While the BFI framework and PPPs don’t guarantee value for money, the guardrails associated with such projects will improve transparency, which in turn should hopefully improve delivery standards.

The true qualitative shift proposed, however, relates to the way conditional grants will be provided to municipalities.

An amount of R27.7-billion has been allocated over the coming three year to a performance-linked reform for metro trading services in electricity, water, sanitation and solid waste, where failure to meet reform and operational targets will result in budgets being reduced.

In addition, the municipal infrastructure grant now incorporates a split delivery model. Municipalities with proven capacity will continue to receive funding directly, but those with capacity or governance failures will receive the grants indirectly. In the latter case, the funding will be provided through a delivery agent such as the Development Bank of Southern Africa.

These are important shifts. But the true test, as always, lies in implementation.