Cape Town - With the country’s real GDP growth now forecast to be 1.9% in 2022 compared to an estimate of 2.1% in February, the government's focus will be on frontline services such as health, education and free basic services.
Tabling the medium-term budget policy statement (MTBPS) in Parliament on Wednesday, Finance Minister Enoch Godongwana announced several measures to support economic growth and reduce fiscal risks.
He said the economy was expected to grow an average of 1.6% over the next three years, adding that this was too low to support the country’s developmental goals. “Accordingly, we must take action to put our economy on a higher growth trajectory.”
Godongwana said the government debt was projected to be more than R4.7 trillion in the current financial year and debt service cost would average R355.2 billion per year over the three-year period.
However, the government was making progress in stabilising the finances and reducing fiscal risks.
“A fiscal deficit of 4.9% of GDP is projected in 2022-23. This will be a decline to 3.2% of GDP by 2025-26,” he said.
Revenue collection has exceeded projections and the gross revenue estimate was revised up by R83.5 billion to R1.68 trillion, he said.
Godongwana also said they had accelerated the implementation of structural reforms to address binding constraints on economic growth and support investment and job creation.
The government will take over a significant portion of the power utility Eskom’s R400 billion to ensure its long term financial viability.
He said the relevant debt instruments and method of effecting the relief were still to be determined.
“The debt take-over, once finalised, together with other reforms will ensure that Eskom is financially sustainable.
The programme will allow Eskom to focus on plant performance and capital investment and ensure that it no longer relies on government bailouts,” he said, adding that further details of the programme would be announced in the 2023 budget after consultations.
Tabling his adjustment appropriation bill, Godongwana said R13 billion in spending adjustments were made.
These included the R389m for Welizizwe Rural bridges, R500m to start the Home Affairs digitisation project and R118m to deal with relocation costs and preparations for the rebuilding of Parliament.
Good Party MP Brett Herron said there could be no economic growth without a stable electricity supply.
Cape Times