South Africa’s National Treasury has reaffirmed government’s commitment to fiscal consolidation and “returning public finances to a sustainable path”, following local government elections that saw the governing African National Congress (ANC) record its worst performance since 1994.

The ANC’s national support fell to below 54% and for the first time the party won, but failed to secure majorities, in the key Gauteng metropolitan areas of Johannesburg and Ekurhuleni. It also received fewer votes than the Democratic Alliance (DA) in Tshwane and Nelson Mandela Bay for the first time, although the opposition party also failed to secure outright majorities in those cities. However, the DA consolidated its control over the City of Cape Town, where it received over 66% of the vote.

In response to suggestions by rating agencies that there was now a risk that the ANC could resort to more populist policies that could result in it breaching its self-imposed expenditure ceiling, National Treasury director-general Lungisa Fuzile stressed that the policy stance articulated in the 2016 Budget remained intact.

“Government remains committed to implementing fiscal consolidation and returning public finances to a sustainable path while protecting core social and economic programmes. Government’s track record of achieving fiscal targets lends weight to future fiscal plans, in particular that of maintaining the expenditure ceiling over the medium term,” he said in a statement.

Government also remained committed to its “economic reform agenda”, which seeks to reignite growth through collaboration with business, labour and civil society.

Key initiatives that government is focusing on with such partners include: unblocking obstacles to faster employment growth in key sectors; undertaking reforms in State-owned companies; continuing to invest in economic infrastructure through public-private partnerships and expanding the independent power producer programme.

“The National Treasury is also committed to strengthening municipal finances through budget reform and technical support initiatives and working with cities to accelerate investment in urban development through the City Support Programme,” Fuzile said.