Rédaction Africa Links 24 with Marianne Merten
Published on 2024-02-21 19:26:46
Finance Minister Enoch Godongwana received almost unanimous backing from his Cabinet colleagues for his maiden Budget, which was described as “disappointing”, “uninspiring” and “an electioneering Budget” by opposition parties. Concerns were raised over the decision to shift R150-billion from the SA Reserve Bank’s Gold and Foreign Exchange Contingency Reserve Account (GFECRA) to fund the Budget, with some describing it as “plundering our reserves.” Draft legislation was tabled with the Budget in Parliament, aiming to address potential dodginess in the use of the reserves.
South Africa’s debt service costs need urgent attention, with 21 cents in every rand spent on repaying debt. The second largest expenditure in 2024 is debt repayment, followed by expenditures on social development, Basic Education, and Health. The focus on reducing debt was welcomed, but concerns were raised about the decision to shift funds from the reserves to finance the Budget.
Opposition parties criticized the Budget for not doing enough for consumers and the economy. DA MP Dion George expressed concern over the impact of diminishing South Africa’s standing among global investors, while IFP MP Mzamo Buthelezi suggested that the Budget was designed to please people rather than address the underperformance of government departments.
EFF MP Veronica Mente, Freedom Front Plus finance spokesperson Wouter Wessels, and ActionSA leader Herman Mashaba all expressed disappointment with the Budget, while Business Leadership South Africa welcomed it, emphasizing the commitment to appropriate spending levels given the weak economic outlook.
Finance Minister Godongwana defended the decision to utilize the reserves, highlighting the need to maintain fiscal discipline, despite pressure for increased spending. South African Revenue Service Commissioner Edward Kieswetter also supported the Budget, emphasizing the importance of a well-functioning tax administration in a growing economy.
The Budget raised social grants and announced a significant infrastructure build to attract private sector partnerships. Draft regulations for public comment were published to support private-public partnerships, with the intention of fast-tracking delivery. This includes concessional loans, infrastructure bonds, and an increased focus on the Development Bank of Southern Africa as the preferred implementing and financing agent.
The Budget also outlined prioritized water and sanitation projects, as well as new independent power producer projects, emphasizing the importance of private initiatives in contributing to the country’s infrastructure and energy needs.
National Treasury has also focused on cutting waste and ensuring greater transparency in government spending. Grants are increasingly paid over only when conditions and implementation goals are met, and underperforming allocations have been cut. The Budget Review also outlines the importance of the private sector in contributing to the country’s energy needs.
In his Budget speech, Minister Godongwana emphasized the importance of growing the economy to address social inequalities and deprivations, emphasizing the need for a balanced approach to economic growth and redistribution.
Overall, the reaction to the Budget was mixed, with opposition parties expressing disappointment, while business and some government officials welcomed the measures outlined in the Budget to address economic challenges and attract private sector partnerships.
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