Johnathan Paoli
South Africans are gritting their teeth while awaiting Finance Minister Enoch Godongwana’s 2024 Budget Speech to be delivered on Wednesday at the National Assembly sitting in Cape Town City Hall.
During this speech, Minister Godongwana is expected to outline the government’s financial, economic, and social commitments for the year, despite limited resources.
The budget aims to balance economic growth and support for vulnerable segments of society, and will include proposals for revenue collection to fund planned interventions and commitments.
Ahead of the Finance Minister Godongwana’s budget speech, DA Cape Town Mayor Geordin Hill-Lewis said the government’s budget austerity measures should come from meaningless expenditure and not essential services.
Hill-Lewis suggested that rather than cutting spending that actually delivered to the poor, cuts should be made to the government departments that served no meaningful purpose, while there was also billions in unnecessary funding going towards ministerial VIP security, estimated to begin in excess of R3 billion.
“I understand that South Africa’s fiscal footing is increasingly precarious and that the minister has a very difficult budget to present and that cuts have to be made somewhere, but those cuts absolutely cannot come from basic services, and the upgrading of informal settlements, and public housing, and other essential services for poor residents in municipalities and provinces across the country,” Hill-Lewis said.
Some economists have predicted that Godongwana will announce the latest increase in both the General Fuel Levy (GFL) as well as the Road Accident Fund (RAF), putting a further strain on the finances of the embattled country.
Investec Chief Economist Annabel Bishop said that the country has seen revenue fall back and instead of pulling back at the same degree on expenditure, the government has borrowed more and has spent that money, which has necessitated a tighter monetary policy, resulting in more frequent interest rate hikes.
While Investec Corporate and Institutional Banking Treasury Economist Tertia Jacobs said in December last year, the banks extended a government guaranteed one-year loan facility to Transnet to help alleviate liquidity pressure in 2024, requiring roughly R100 billion of core fixed investment, which could potentially create a mechanism to bring in more private sector investors as well as development finance institutions, reducing pressure on the domestic market. At the moment, it’s basically banks and fund managers that have to finance the government.
The Congress of South African Trade Unions (COSATU) spokesperson Matthew Parks said workers across the nation have high expectations for the 2024/25 Budget.
Parks said the challenges facing workers, society, the economy and the state are daunting.
The nation is still struggling to recover from a painful decade of state capture and corruption, stubbornly high unemployment at 41% generally and 60% for young people, the world’s highest levels of inequality, the global pandemic of COVID-19 and the economic lockdown, a painful period of load shedding, endemic crime and corruption including cable theft, embattled State-Owned Enterprises and increasingly dysfunctional municipalities, badly overstretched public services and weak economic growth.
“Society correctly expects more from the governments they elect to office, and which are funded through their hard-earned wages and taxes. Whilst we are disappointed by the pace at which our numerous socio-economic challenges are being resolved, and this is healthy for a robust and noisy democracy, we should equally acknowledge and applaud where green shoots are appearing,” he said.
Important progress that Cosatu has welcomed over the past year includes a 5% reduction in the unemployment rate, the R253 billion debt relief package for Eskom and overall reductions in loadshedding, an 8.5% increase in the National Minimum Wage as well as the pending enactment of the Two Pot Pension Reforms due to come into effect on 1 September 2024.
“These provide hope and relief for struggling workers.
“Whilst applauding these achievements, much remains to be done, in particular in the remaining few months of the 6th administration and Parliament,” he added.
The labour federation said what the country cannot afford is another Budget based on the delusion that the sole challenge as a society is the debt level and to hope the economy will grow, unemployment fall and public and municipal services will be rebuilt and SOEs be fixed by some divine miracle.
“The key to resolving these ticking time bombs is a bold and aggressive budget. Workers’ patience is not limitless, nor do we have the luxury of time,” he said.
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