MEDIUM-TERM BUDGET POLICY STATEMENT BY JESSIE TAYLOR
Taking tough action to ensure economic recovery Consolidated government spending will exceed R2.2-trillion this year and will rise to R2.5-trillion in 2025/26.
W
hile South Africa’s “robust pace of economic recovery” was derailed earlier in the year – due to natural disasters, industrial action and widespread power cuts – the Medium-Term Budget Policy Statement maps out several positive measures the government intends to take to encourage economic growth. During his delivery of the statement, Finance Minister Enoch Gondogwana said the global environment will be less supportive of South Africa’s economic growth than anticipated in the February 2022 Budget Speech. The IMF’s global growth forecast for 2022 has been revised down, from 4.4% to 3.2%, and the 2023 estimate from 3.8% to 2.7%.
“We now expect real GDP growth of 1.9% in 2022, compared with an estimate of 2.1% in February. Over the next three years, the economy is expected to grow at an average of 1.6%. This level of growth is too low to support our developmental goals. Accordingly, we must take action to put our economy on a higher growth trajectory,” said Minister Gondogwana. Part of this action will be the implementation of structural reforms, including in the electricity sector, and several policy and regulatory changes aimed at creating a competitive energy market, are also underway. Minister Gondogwana added that the government is also working to address inefficiencies in port and
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rail which are costing the economy billions and undermining efforts to raise growth.
A FOCUS ON SPENDING
The government will be focusing on infrastructure growth and has set aside R112.5-billion in 2025/26 for building new and rehabilitating existing infrastructure – an increase from R66.7-billion in 2022/23. This includes roads, bridges, storm-water systems, and public buildings. This makes spending on capital assets the fastest-growing item by economic classification. Government debt is projected to be more than R4.7-trillion in the current financial year. The medium-term strategy will maintain a prudent approach to fiscal policy, to decrease the debt burden and