Among the expected focal points are the National Health Insurance (NHI) and the increasing demand for social transfers. However, the country’s rising debt burden, compounded by the absence of a debt ceiling, poses a significant challenge for the minister as he navigates competing financial demands.
Greg Rammego, Government and Public Service Leader at Deloitte Africa, believes Godongwana is likely to maintain a cautious approach. “I think Godongwana, in the Medium-Term Budget Statement, did allude to the fact that government has done quite a lot in terms of maintaining a prudent expenditure or spending,” he said. “And so I expect that will help in terms of maintaining the budget deficit, as well as stabilising tax collections.”
Tax revenue will be a crucial element in Godongwana’s budget, with efforts by the South African Revenue Service (SARS) to strengthen compliance and improve collection methods. “SARS has been hard at work improving their systems in terms of auditing taxpayers to ensure they deliver on the revenue targets set in the MTBPS,” Rammego noted.
This year’s budget comes in the wake of the first State of the Nation Address (SONA) under the Government of National Unity (GNU), which means that budget allocations will reflect a broader coalition of policy priorities beyond those of the ANC alone. “This no longer just prioritises the ANC’s policies and where they would like to allocate budget and development plans,” Rammego pointed out. “They’ve got to consider what other stakeholders within the Government of National Unity are also prioritising.”
Despite ideological differences among GNU partners, there appears to be consensus on key areas of economic development. “What is good about the GNU is that they have put their differences aside, whether policy or ideological differences, to focus on getting South Africa on the economic growth path we all want to see,” he said. “I expect the Minister of Finance to tell us more about what this government of national unity has agreed on and how they’re going to ensure spending is managed in a much more guarded way while also increasing investor confidence.”
Key areas of focus are expected to include energy security, rail and freight infrastructure, and strengthening state capacity. However, the NHI remains a contentious issue, with disagreement among GNU partners and concerns from the business sector regarding its funding. “The president already announced in the SONA that they will be embarking on phase one of the
NHI implementation,” Rammego explained. “I expect the Minister of Finance to tell us how they intend to fund this phase one project, but also to provide some level of detail on the overall funding model for the NHI, because government has not been clear enough on this.”
Rammego stressed that clarity on the NHI’s financial model is essential for boosting confidence among businesses and GNU partners. “We’re looking forward to the budget speech with a sense of expectation around the NHI funding model. The minister would be well advised to ensure he provides enough details to instil confidence.”
As government introduces a new development framework to replace the Medium-Term Strategic Framework, concerns have been raised about the effectiveness of long-term planning. “There are many plans coming up with very little to show for them,” Rammego said. However, he believes the GNU’s structure could lead to improved accountability. “Previously, there was only one party, leading government, and their shortcomings are well documented. Now, we have a new government with different political parties who can hold each other accountable. There is a sense of newness, and those who have not been in government before want to make a good impression.”
--ChannelAfrica--
