Minister Godongwana has termed to budget as a “positive” one.
There are numerous positives:
- Increase in tax revenue, but revenue from the commodity boom expected to be over in 2 years, so will need economic growth to maintain tax revenues at current level and increase. This talks to decisiveness and implementation.
- The budget deficit to narrow to 3.2% of GDP in 2023/4. This is welcome but will be dependent on the state implementing public sector wage increases as announced in MTBPS.
- We welcome maintenance of public sector wage increases to 3%.
- We welcome the increase in infrastructure budgets, but there must be a total focus on identifying a limited number of infrastructure projects that are economically and socially impactful and the ability to implement urgently must be demonstrated.
- The allocation of R 5.8 billion to Transnet is good, but we look forward to Transnet being serious about a genuine partnership with the private sector to make private involvement the norm instead of the exception.
- Increases in allocations to the Police, NPA, SIU and FIC are critical. This sends out a clear message that law and order must be high up on the agenda, although this might be too late to avoid a grey listing.
- We also welcome an increase in allocation to SARS, which is critical to enabling efficient revenue collection and deepening and broadening the revenue base.
We note the statement on ESKOM. However, given the ongoing energy crisis, and the announcement of the President’s plan, we would have expected a clearer and more definitive approach in the MTBPS. We welcome the announcement that government will take over between one – third and two-thirds of the debt and we welcome the conditions announced. However, we must say that government should have moved faster to address the structural problems at ESKOM and address its structure.
Despite these positive areas in the MTBPS, the overall outlook is poor, with growth forecasts dropping to 1.9% for this year, from a projection of 2.1%. This is primarily due to load shedding and a drop in exports. Real GDP growth over the next 3 years expected to be a paltry 1.6% this underlines the urgency to deal with the energy situation and the imperative for investment and growth. BUSA has been urging government to collaborate with us in bilateral structures to progress critical deliverables in critical priority interventions. We will continue to try and progress this.
Business Unity SA CEO
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