MTBPS: Godongwana takes no-nonsense approach to addressing some of SA's fiscal risks
Over the past 15 years, public debt has accumulated driven by a wide gap between spending and revenue.
Finance Minister Enoch Godongwana tables Budget 2024. Image: National Treasury RSA on Twitter
JOHANNESBURG - Finance Minister Enoch Godongwana has again taken a no-nonsense approach to addressing some of the country’s fiscal risks, as high expenditure and runaway debt eat away at Africa’s most advanced economy.
Godongwana delivered the Medium-Term Budget Policy Statement in the National Assembly on Wednesday – where the National Treasury gave an update on the state of the country’s public finances since the February budget.
While Godongwana says the National Treasury’s fiscal plans are mostly still on track, he says there are several pressure points that need urgent attention – including lower-than-expected revenue collection, a bloated public service wage bill, an elevated risk premium and higher-for-longer borrowing costs.
"Since the 2008 global financial crisis South Africa’s economy has been characterised by poor growth, unaffordable bailouts of SOEs [state-owned enterprises] and expanding public debt."
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Between then (2008/09) and now (2023/24 financial year) – government debt has grown from R627 billion to R5.26 trillion.
Over the past 15 years, public debt has accumulated driven by a wide gap between spending and revenue.
This has led to increasing debt servicing costs taking up resources that could have been used for other priorities such as education, healthcare and infrastructure projects.
The in-year revenue outlook is weaker than expected because of declining fuel levy and import VAT collections – while troop deployment in the DRC and the e-toll repayment plan is expected to increase expenditure.
Despite this, the State is still on track to achieve a primary surplus in 2024/25 and over the medium term.
The National Treasury says government debt could stabilise at 75.5% of GDP next year.
Debt service costs are expected to reach almost R389 billion in the current financial year.
While there are still some global and domestic risks, Godongwana says fiscal discipline remains a priority.
“Speaker, to achieve the goals of our fiscal strategy, we must better manage our debt. Debt has risen too fast and is too high.”
Godongwana says part of this includes a range of interventions – such as maintaining large primary surpluses to stabilise debt, ensuring higher levels of capital investment, containing public service wage costs and limiting bailouts for SOEs.