“The outlook over the medium term remains weak” said Enoch Godongwana, Minister of Finance. He said this is largely due to loadshedding, poor performance of the logistics sector, high inflation, borrowing costs, and a weaker global environment.
Speaking in Parliament, today, during his mid- term policy budget statement, Gondwana also said challenges facing SA, include an economy that is sluggish, with a GDP growth projected at just over 1%. This is not enough to reach the set target, however, the economy is showing signs of resilience.
A summary of interesting facts and figures:
*The budget deficit has increased by R57 billion, compared to the 2023 estimate.
*Expenditure has exceeded the budget since 2008, due to a global economic crisis.
*Government is having to borrow over R553 billion a year.
This will increase to 5,2 trillion in the next Financial year, to exceed R6, trillion by 2025/2026.
*Interest costs alone will amount to R1,3 trillion.
*Revised grants to water services authorities is underway in the form of a new funding model. The model is the work of the National Treasury and the Department of Cooperative Governance and Traditional Affairs.
*The deregulation of electricity is hurting Municipal revenue, and thus, new ways of income are under discussion.
*A resource pool of R372 million, will be established to respond to climate change needs at a local Government level.
*R1, 2 billion will be added to the Municipal recovery grant to repair infrastructure damaged by the February /March 2023 floods.
*National Treasury is developing a climate risk strategy. A Green growth strategy and a transition to a low carbon economy is becoming urgent, as trade partners are intensifying carbon emission reduction efforts, posing a threat to South Africa, should restrictions be imposed in future.
SA’s part plan is to collaborate with African countries on battery capacity.
*Eskom debt relief loan will amount to R250 billion, by 2026.
The loan is purposed to clear up Eskom’s balance sheet so the power utility can focus on the distribution and transmission infrastructure.