Minister Enoch Godongwana’s Medium-Term Budget Policy Statement outlines South Africa’s plans to stabilize public finances, accelerate growth-promoting reforms, and restructure the state while delivering high-quality public services. The economic and fiscal context of South Africa is discussed, including rising debt levels, combating crime and corruption, and infrastructure investment and growth. The government aims to invest in infrastructure, implement growth-enhancing reforms, and address challenges to promote economic growth and social development for all citizens.
What is the Medium-Term Budget Policy Statement (MTBPS) presented by Minister Enoch Godongwana?
The MTBPS presented by Minister Enoch Godongwana highlights the government’s intentions to stabilize public finances, accelerate growth-promoting reforms, and restructure the size and organization of the state, all while maintaining a focus on delivering high-quality public services. It also discusses the economic and fiscal context of South Africa, including rising debt levels, combating crime and corruption, and infrastructure investment and growth.
Minister Enoch Godongwana unveiled the Medium-Term Budget Policy Statement (MTBPS) to South Africa’s National Assembly on November 1, 2023. This crucial document highlights the government’s intentions to stabilize public finances, accelerate growth-promoting reforms, and restructure the size and organization of the state, all while maintaining a focus on delivering high-quality public services.
The economic forecast remains bleak due to power outages, underperformance in the logistics sector, high inflation, increased borrowing costs, and a weaker global landscape. The International Monetary Fund (IMF) predicts that global growth will decelerate from 3.5% in 2022 to 3% in 2023 and 2.9% in 2024. In South Africa, real GDP growth is expected to reach 0.8% in 2023, 0.1 percentage points lower than the 2023 Budget projection, with an average of 1.4% between 2024 and 2026.
Despite these challenges, the South African economy has demonstrated resilience, with real GDP now surpassing pre-pandemic levels and growth observed in sectors such as construction, agriculture, and services. Nevertheless, risks including falling global commodity prices, heightened inflation, and currency depreciation have emerged, negatively impacting public finances. The primary budget deficit has grown by R54.7 billion compared to the 2023 Budget estimates, resulting from lower revenue performance, increased public service wage bill costs, and higher debt-service expenses.
South Africa’s gross debt is anticipated to increase from R4.8 trillion in 2023/24 to R5.2 trillion in the following financial year and surpass the R6 trillion mark by 2025/26. Gross government debt is predicted to reach 77% of GDP by 2025/26, which is higher than the level projected in February. To avert a fiscal crisis and prevent the accumulation of systemic risks to the economy, the MTBPS sets forth a strategy involving targeted spending adjustments based on policy priorities and a reorganization and streamlining of the state.
The MTBPS underscores the significance of battling crime and corruption to promote economic growth. South Africa’s government is committed to addressing shortcomings in its efforts to combat organized crime and illicit financial flows, especially since its greylisting by the Financial Action Task Force (FATF). The FATF acknowledged that South Africa has made progress in addressing 15 of the 20 technical deficiencies in its legal framework and is advancing well on 17 of the 22 effectiveness action items. The government anticipates addressing all deficiencies identified by FATF by early 2025.
Investing in infrastructure is vital for supporting higher economic growth and widening access to basic services. The government aims to enable a transformative shift in infrastructure investment by leveraging private sector financing and expertise. This approach involves the establishment of an Infrastructure Fund, which will provide blended finance for strategic projects, including those related to water, sanitation, and electricity infrastructure.
Additionally, the government is working on implementing growth-enhancing reforms to eliminate obstacles to investment and increase economic productivity. Key reforms include reducing barriers to entry for small and medium-sized businesses, streamlining regulatory processes, improving the ease of doing business, and fostering greater competition in markets. These measures, together with increased investment in infrastructure, are expected to support higher economic growth and job creation in the medium term.
In conclusion, the Medium-Term Budget Policy Statement presented by Minister Enoch Godongwana emphasizes the government’s determination to stabilize public finances, accelerate growth-enhancing reforms, and restructure the state, all while ensuring quality public services for the people of South Africa. By addressing challenges such as crime, corruption, and infrastructure investment, South Africa aims to promote economic growth and social development for the benefit of all its citizens.
The MTBPS presented by Minister Enoch Godongwana highlights the government’s intentions to stabilize public finances, accelerate growth-promoting reforms, and restructure the size and organization of the state, all while maintaining a focus on delivering high-quality public services.
The economic and fiscal context of South Africa discussed in the MTBPS includes rising debt levels, combating crime and corruption, and infrastructure investment and growth.
Minister Enoch Godongwana unveiled the MTBPS to South Africa’s National Assembly on November 1, 2023.
The economic challenges faced by South Africa include power outages, underperformance in the logistics sector, high inflation, increased borrowing costs, and a weaker global landscape.
The MTBPS sets forth a strategy involving targeted spending adjustments based on policy priorities and a reorganization and streamlining of the state to avert a fiscal crisis and prevent the accumulation of systemic risks to the economy.
South Africa’s government is committed to addressing shortcomings in its efforts to combat organized crime and illicit financial flows, especially since its greylisting by the Financial Action Task Force (FATF). The government anticipates addressing all deficiencies identified by FATF by early 2025.
The government aims to enable a transformative shift in infrastructure investment by leveraging private sector financing and expertise through the establishment of an Infrastructure Fund, which will provide blended finance for strategic projects, including those related to water, sanitation, and electricity infrastructure.
The government is working on implementing growth-enhancing reforms to eliminate obstacles to investment and increase economic productivity, including reducing barriers to entry for small and medium-sized businesses, streamlining regulatory processes, improving the ease of doing business, and fostering greater competition in markets.
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