Star 2023-11-02

ECONOMIC growth in South Africa is expected to stagnate below 1% this year as activity remains constrained by inadequate electricity supply, freight rail capacity and a weaker global outlook. Finance Minister Enoch Godongwana yesterday said that the long-standing structural constraints continued to limit economic performance in the country. In his Medium-Term Budget Policy Statement (MTBPS), Godongwana said power cuts were expected to continue for the remainder of this year, before gradually easing in 2024. He said the gross domestic product (GDP) outlook had dimmed in spite of the 0.9% growth experienced in the first half of the year, and the recovery in sectors such as tourism, agriculture, construction, transport and communications. “We forecast a 0.8% growth in real GDP in 2023. This is 0.1 percentage points lower than…

A SPIN-OFF from the electricity crisis is that it has forced many households and businesses to invest in renewable energy and this capacity is now double that of the strictly government-controlled formal renewable energy programme, which started in 2011. In yesterday’s Medium-Term Budget Policy Statement (MTBPS), Finance Minister Enoch Godongwana stated that rooftop solar capacity installed by homes and businesses amounted to 4.412MW, or “twice the capacity installed to date under the Renewable Energy Independent Power Producer Procurement Programme.” Over the next three years, he predicted, more than 11 000MW of electricity capacity from various renewable resources will be added, which would significantly reduce power outages. The MTBPF yesterday included spending on renewable energy and a just energy transition in line with international efforts to combat climate change and…

The country’s fiscal outlook had severely deteriorated and debt-service costs are rising, he says FINANCE Minister Enoch Godongwana has delivered the news no-one wanted to hear, that there is going to be less food on the table as the government has to pay bloated interest on its debt. Godongwana yesterday warned that South Africa’s fiscal outlook had severely deteriorated as the rising debt-service costs were “crowding out” priority expenditure and consuming a greater share of the National Budget. “The main Budget deficit has increased by R54.7 billion compared with the 2023 Budget estimates. This reflects lower revenue performance, higher wage bill costs and higher projected debt-service costs,” Godongwana said. This comes as the government is expected to significantly raise its borrowings to average R553.7bn per year over the next…

Treasury Director-General Dr Duncan Pieterse, who was only appointed in August 2023, but who was intimately connected with the Eskom bailout negotiations, said yesterday that Eskom debt relief remained conditional on progress. The media have privileged access to the Finance Minister as well as Treasury officials during the lockup, while the Minister is joined by the Director- General of Treasury, the governor of the South African Reserve Bank and the Commissioner of the South African Revenue Service. As at September 30, 2023, the government has disbursed R16 billion of the R78bn debt relief for 2023/24. A task team has been established with officials from the National Treasury, the Department of Public Enterprises and Eskom to monitor compliance with the conditions and report quarterly on whether Eskom qualifies for the…

GROWING small and medium-sized enterprises (SMEs) and making it easier for them to trade was a simpler solution to economic growth and job creation than the strategies outlined by the government in the Medium-Term Budget Policy Statement (MTBPS), Garth Rossiter, the chief risk officer of SME bank and funding services provider Lula, said yesterday. Rossiter said that to him, the MTBPS appeared to be “vague” plans that would attempt resolve the country’s immediate problems over the next three years, such as the issues of electricity, load shedding, and the ability to transport goods in the country. These problems were also negatively impacting the ability of small businesses to trade, he said. He said unlike previous Budgets, SME’s or companies were not mentioned once in the MTBPF, and while small businesses…

THE MINISTER of Finance, Enoch Godongwana, said yesterday that the collection of revenue this year was lower relative to the 2023 Budget, citing under-collections in corporate tax, particularly from the mining sector. The gross tax revenue estimate for 2023/24 has been revised down by R56.8 billion to R1.73 trillion. This reflects lower revenue performance, higher wage bill costs and higher projected debt-service costs. “The main reasons for this are a sharp fall in corporate income tax, particularly from the mining sector. “The result of the shortfall is a substantial worsening in the main budget deficit in the current fiscal year. We are now projecting a deficit of 4.9% of gross domestic product (GDP) compared to our previous estimate of 4%,” he said. Godongwana said under these circumstances, measures…