By Lehlohonolo Lehana.
Finance minister Enoch Godongwana has dismissed suggestions that his 2024 budget tabled in parliament on Wednesday, was designed to carry favor with voters three months away from the country’s next polls.
Godongwana said his main intentions in what could be the last budget he’ll table have been to grow the economy, stabilise debt and deal with structural reforms.
He addressed an RMB and Sunday Times business breakfast on Thursday morning following the tabling of the national budget in Parliament.
On the eve of its tabling, President Cyril Ramaphosa announced that the country would go to the polls on 29 May.
Godongwana used his budget speech to announce the increase in social grant, saying this was done to keep in line with inflation and increase access for those who are eligible.
“We are sensitive to the increase in the cost of living for the nearly 19 million South Africans who rely on these grants to make ends meet. In this regard, we have done as much as the fiscal envelope allows,” he said.
He allocated an increase of R100 to the old age, war veterans, disability and care dependency grants. This amount will be divided into R90 effective from April, and R10 effective October.
A R50 increase to the foster care grant, and A R20 increase to the child support grant.
This has been criticised to be part of the ANC’s electioneering strategy.
But Godongwana rubbished the claims.
“The little thing people are going to be saying ‘are you trying to run an election budget’.
“An election budget should have been last year, 2023/24. This budget cannot influence the electoral outcomes.
Godongwana said, should he return as finance minister after the elections, he will be more aggressive about fiscal consolidation to close the budget deficit by 2026/27.
“The key issue was, we have got to do the right things, you can’t change anything. It’s not an election budget, this budget.”
He believes the National Treasury is on track to ensure sustainable finances but doesn’t believe a budget can influence an election a few months away.
Government has also raised US$3.3 billion so far from Multilateral Development Banks and International Finance Institutions to support climate change, energy, and just transition objectives.
Godongwana said National Treasury plays a crucial role in mobilising resources, designing incentives, and influencing policy to mainstream climate change.
According to the 2024 National Treasury Budget Review, the department is finalising a disaster risk financing strategy, centred on innovative financing and risk transfer to effectively mitigate climate impacts.
The strategy will boost state capacity to fund disaster recovery efforts and expand insurance mechanisms to protect against the financial strain of natural disasters.
Godongwana added his speech, has been met with deep concerns, as activists argue fiercely that more needs to be done to combat crime in South Africa.
“A total of R765 billion is allocated to the peace and security cluster. In the coming financial year, 10 000 new police recruits will be trained.”
Analysts said that questions will remain about South Africa’s long-term fiscal outlook until there was clarity on how the anchor would be binding.
“Realistically it does require broader sensitisation of all political actors,” said Razia Khan, head of research at Standard Chartered Bank. “From Treasury, we’re getting a very clear sense that debt levels are problematic. But if they don’t start dealing with it now, they’ll have to run ever greater primary fiscal surpluses in the future in order to stabilise debt levels.”
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The South African Federation of Trade Unions secretary general Zwelinzima Vavi said the speech did not highlight any concrete plan to address unemployment.
“The minister only speaks about unemployment in so far as he refers to his presidential projects. The presidential project is not a real solution to the issue of unemployment. So, we are very disappointed.”
Earlier this week, Stats SA reported that the country’s unemployment rate has reached 32.1% from October to December 2023, up 0.2 of a percentage point on the previous quarter.
Congress of South African Trade Unions (COSATU) Matthew Parks said there should have been more aggressive proposals to tackle load shedding and crime.
“This is their business-as-usual budget with more focus in reducing the debt but not focused enough in growing the economy. We do welcome the increase in the police headcount, but we had hope to see increases in National Prosecuting Authority as well as the courts because we need to get a grip on reducing crime and corruption.”
Business organisations Business Leadership South Africa (BLSA) and Business Unity South Africa (Busa) said the 2024 Budget was “realistic and commendable in an election year”, and “a generally positive step forward given the current economic context”.
Godongwana delivered a strong Budget that commited government to appropriate spending levels given the weak economic outlook. This was positive for business, which needed reassurance that fiscal discipline would be maintained, despite pressure for increased spending from many quarters of government, said BLSA CEO Busi Mavuso.
She said the Minister was realistic that economic growth was going to remain subdued in the short term. The effects of the weak economy over the past year were reflected in a sharp deterioration in tax revenue collection for 2023/24 to R1.73-trillion, R56.1-billion lower than estimated in the 2023 Budget.
The Minister’s emphasis on fostering economic growth, safeguarding the economy and maintaining fiscal stability aligned with Busa’s objectives, commented Busa CEO Cas Coovadia.
“We appreciate the acknowledgment of the need for greater collaboration between the private sector, State-owned enterprises (SoEs), and government departments, particularly in critical areas like infrastructure, logistics and energy,” he said.