Government has revised down South Africas economic growth from 1.3 percent to 1.1 percent in 2024. The National Treasury further notes that the economy is beginning to reflect the combined effects of a more stable global environment, structural reforms, uninterrupted electricity supply and cautious confidence in the new government of national unity. Finance Minister Enoch Godongwana says the economy is forecast to grow by an average of 1.8 percent over the next three years. Domestically, we forecast a real GDP growth of 1.1 percent in 2024. This is lower than the estimate of 1.3 percent in February. This policy statement outlines our strategy to lift the economy to a higher and more inclusive growth path. The strategy is anchored on four pillars, one is maintaining macroeconomic stability, two is implementing structural reforms, three is supporting growth-enhancing infrastructure and four is building state capability. Meanwhile, the budget deficit for the current financial year increased by R34.7-billion mainly due to weaker revenue performance. National Treasury notes that its fiscal strategy remains on course as the consolidated budget deficit is expected to narrow from 5-percent of GDP in 2024/25 to 4.3-percent of GDP in 2025/26. Godongwana says debt is expected to stabilise at 75.5-percent of GDP in 2025/26. Over the medium term, the main budget deficit will decline from 4.7 percent of GDP in 2024/25 to 3.4 percent in 2027/28, with the primary budget surplus rising to 1.8 percent of GDP. The primary surplus will be sufficient for debt to stabilise at 75.5 percent in 2025/26. Debt will then decline over the rest of this decade. The key impact of this is that debt service costs will also stabilise and begin to decline over the next few years. Spending Government spending will increase by R16.8-billion per year starting next year until 2026-27. Increased spending is mainly due to the contribution towards the repayment of the Gauteng Freeway Improvement SANRAL debt, the increase to the COVID-19 distress relief grant announced in February and the carry-through costs for the deployment of SANDF troops in the DRC. Godongwana says governments consolidated spending is expected to reach R2.4-trillon in the current financial year. A special appropriation bill that mostly covers SANRALs obligations related to phase1 of the Gauteng Freeway Improvement Programme. A large part of this appropriation is made possible by the Gauteng Provincial Government honouring its R3.8 billion contribution to the debt this year. Over the medium term, consolidated expenditure is expected to increase from R2.4 trillion in 2024/25 to R2.8 trillion in 2027/28.
MTBPS 2024 Medium-Term Budget Policy Statement Reactions
