Star 2024-10-31

FINANCE Minister Enoch Godongwana has painted a stark picture of South Africa’s economic future, warning that growth will not accelerate quickly enough to reduce the nation’s soaring unemployment rate in the coming three years, despite signs of recovery from structural reforms. This was the bittersweet message from Godongwana as he tabled the 2024 Medium-Term Budget Policy Statement (MTBPS) before Parliament yesterday. The National Treasury’s adjustments yesterday have further dimmed hopes, lowering the 2024 economic growth forecast to 1.1%, down from the earlier 1.3%. This was in line with the International Monetary Fund (IMF) forecast issued last week during the release of the World Economic Outlook for October, which was an upward revision from the previously forecast 0.9% gross domestic product (GDP) growth for 2024. The expectation underscored a sluggish economic…

The first Medium-Term Budget Policy Statement (MTBPS) since the Government of National Unity (GNU) failed to inspire confidence among investors, with the rand dropping as Finance Minister Enoch Godongwana tabled a speech that warned of slower economic growth, higher debt, and fewer revenue collections. The rand weakened from about R17.59 to as high as R17.76 as the minister spoke, Chantal Marx, the head of investment research at FNB Wealth and Investments said in a note yesterday. The currency was at R17.66 in late afternoon trade, while the JSE’s All Share Index ended the day at 86 759 points, 0.62% down. Marx said the JSE didn’t react much, although there was “some downward pressure on the SA Inc segments of the market – largely explained by the rand and bond yield…

Godongwana says government will stick to its debt-reducing strategy and confront trade-offs Finance Minister Enoch Godongwana has warned that the government will stretch every rand to the maximum and do more with less as the public debt will breach the R6 trillion mark, or 75%, in relation to gross domestic product (GDP), in the next fiscal year. However, presenting the 2024 Medium-Term Budget Policy Statement (MTBPS) in Parliament yesterday, Godongwana allayed fears and said the government would arrest fiscal deterioration in the medium-term. Godongwana said the government would stick to its debt-reducing strategy and confront trade-offs in a bid to create the necessary conditions for a fast-growing economy that facilitates employment. “To achieve the goals of our fiscal strategy, we must better manage our debt. Debt has risen too fast…

The government is implementing many and substantial reforms aiming to create conditions to attract greater private sector participation in the funding, construction and operation of infrastructure. Finance Minister Enoch Godongwana said in his MTBPS speech yesterday that these reforms include mobilising significant private sector financing and technical expertise to augment the limited public sector capacity and capability. Well-known economist Dr Roelof Botha said the construction sector at large welcomed these reforms, as the “state capture years” and the Covid pandemic had robbed South Africa of more than a decade of investment in maintenance and new infrastructure investment, and in the meantime, South Africa’s infrastructure requirements had increased due to the energy transition, the bigger economy and population growth. He said the likelihood of lower interest rate in November would increase…

Finance Minister Enoch Godongwana has reassured stakeholders about the government’s commitment to preparing for the National Health Insurance (NHI) rollout, despite a lack of direct funding allocations for its implementation over the next three years. Godongwana’s remarks come amid scrutiny of the NHI framework and growing discontent among the business community regarding its implementation and consultation processes. According to the 2024 Medium-Term Budget Policy Statement (MTBPS) documents, the health sector will continue to enhance health infrastructure through sustained allocations in direct and indirect infrastructure grants in preparation for the implementation of the NHI. However, major funding shifts are not expected in the 2025 medium-term expenditure framework period as the focus will be on developing systems and mechanisms that support this reform, as outlined in the NHI Act of 2023. Briefing…

The government has forecast lower tax revenue for the next two years, with one reason being the reduced VAT gained from the ending of the boom in alternative energy product imports that occurred through the period of loadshedding. Despite this under performance in near-term revenue collections, however, the tax-to-GDP ratio was expected to remain resilient and tax collections were expected to remain buoyant, National Treasury said in the MTBPS. "Overall, revenue growth will improve over the MTEF (Medium-Term Economic Framework), helping to narrow the budget deficit," said Nedbank Group's economic unit yesterday. Treasury said revenue collections over the first half of 2024/25 were 5.2% higher than the same period last year, but the low economic growth environment and lower VAT receipts had crimped the tax collection and the government revenue…