Medium-Term Budget Policy Statement: What parties anticipate from Godongwana

Political parties state that the Medium-Term Budget Policy Statement, to be presented by Finance Minister Enoch Godongwana on Wednesday, 30 October, will clearly reflect the priorities of the Government of National Unity.

Godongwana is set to table the MTBPS which provides an updated view of the country’s economic health, in Parliament at 14:00.

POLITICAL PARTIES EXPECT FROM THE MEDIUM-TERM BUDGET POLICY STATEMENT

ActionSA said there is no doubt that the country stands at cross roads where a reimagined fiscal policy framework defined by decisive action is essential to building a more equitable, resilient and growth-focused economy.

ActionSA member of Parliament Alan Beesley said the country needs a clear path towards a fiscally sustainable future that uplifts every South African, particularly the millions who remain vulnerable on the margins of a stagnant economy.

Beesley called for additional funding to be allocated to SARS in order to improve revenue collection and clamp down on illicit trade.

Additionally, Beesley criticised government’s decision to reduce funding allocated to education.

“Instead of cutting education budgets, we should be investing more, especially in training and retaining quality teachers,” he added.

On the other hand, the African National Congress (ANC) said it wants Godongwana to expand the basket of zero-rated food items.

Meanwhile, the Economic Freedom Fighters (EFF) said they aren’t expecting much from the Medium-Term Budget Policy Statement because Godongwana hasn’t given a clear direction on where the country is headed fiscally.

Maotwe pointed out that the country’s debt stands at R4 trillion compared to R245 billion in 1994. While acknowelding that there is nothing wrong with having debt, the issue is when the country actually borrows money to pay debt.

“You must borrow money, but that money must be used to create infrastructure, to build industries so that you are able to produce goods and services and sell back to the market for you to recover that money and pay your debt while making profit but that is not happening,” EFF MP Omphile Maotwe told Newzroom Afrika.

MTBPS EXPECTED TO STABILISE THE DEBT RATIO

Johann Els, Group Chief Economist at Old Mutual, the MTBPS is expected to showcase continued fiscal consolidation efforts and policy reforms to narrow the budget deficit and stabilise the debt ratio over the coming years.

Els said the country’s fiscal position is steadily improving, and the budget deficit is expected to narrow further from 2023’s figures. The outcome this year will track better than February’s estimates.

The chief economist also predicted that the primary budget balance would reach a slightly bigger surplus this year – compared to previous estimates, a significant milestone that the Treasury expects will continue to strengthen in the medium term. This progress is attributed to improved revenue performance and disciplined expenditure control, which are likely to reduce the fiscal deficit to around 4.3% of GDP, down from earlier projections of 4.5%.