Finance Minister Enoch Godongwana presented the 2024 Medium-Term Budget Policy Statement (2024 MTBPS) to Parliament this past week. The MTBPS is a critical element in the overall budget process, as it sets out the policy framework for the budget presented every February. Photographer: Armand Hough / Independent Newspapers
This past week South Africa’s Minister of Finance Enoch Godongwana delivered the 2024 Medium Budget Policy Statement (MTBPS) to update on the nation’s finances.
It is no secret that the economic performance of the country can directly have an impact on consumers
The MTBPS plays an important role by providing a mid-year review of fiscal performance around the targets set in the February Budget, noting any reallocations or adjustments to spending that have become necessary since the Budget was approved.
Reshni Singh, the CEO at BPESA, told Business Report that the primary theme around the MTBPS was focused on boosting economic recovery, growth and job creation, by targeting key areas such as macroeconomic stability, further boosting structural reforms and public infrastructure investment.
Singh said, “While certainly, the picture still isn’t as bright as we would hope with both debt and budget deficit increasing, the good news is that a stronger focus on better infrastructure and items such as transport, electricity and water for example, as well as on driving job creation through these reforms is crucial to bolstering South Africa as an investment destination.”
Singh further said, “We are already the third most attractive offshoring destination in the world and if we get this budget allocation right and make some strong movement, it gives us another springboard to continue driving foreign direct investment which in turn will not only bolster economic stabilisation and activity but plays a vital role in job creation and skills development, a priority for government in solving a large part of South Africa’s problems.”
Meanwhile, Brina Biggs, a senior manager at Budget Insurance, said the MTBPS outlined significant measures aimed at improving the lives of everyday South Africans and fostering a conducive environment for businesses to thrive.
Biggs said, “Some of the highlights from the MTBPS was government’s commitment to continue and potentially increase social grants, providing essential support to vulnerable citizens. Showcasing efforts to reduce national debt and maintain a budget surplus which will lead to lower inflation, job security, and improved living standards for South Africans. Businesses will benefit from increased investment confidence and predictable costs, so shoring up our economic stability, further supported by a stable energy supply over the last couple of months.”
“Lower interest rates and reforms for early access to retirement savings will stimulate economic growth and job creation through boosting consumer spending and also help with inflation control which will help keep prices stable and manageable.”
Biggs further added, “The 2024 budget is designed to foster economic stability, support citizens, and create a thriving environment for businesses. What could have been a rocky 2024, shows instead stability and increased business confidence showing how together, we can ensure a prosperous future for all South Africans and literally budget away bad expensive days.”
Hayley Parry, a money coach and facilitator at 1Life’s Truth About Money, noted that for the first time in 15 years, the government announced that they will be making a surplus in the 2023-2024 year.
Parry told Business Report, “This is good news because it means that the government is doing what it also needs to do, spending less than it earns. The bad news, however, is that much like most South African consumers, the government is unfortunately still paying too much towards the servicing of their debts that it has already incurred.”
“In the current financial year, the South African government will be spending just under R390 billion servicing debt costs and their debt levels are anticipated to reach just over R6 trillion or 75.5% of GDP in 2025 and 2026. This is not good because if you think about it from the country's perspective, we were able to spend that money that is currently being used to service debt costs.
“Two things you know that we need in the country. It will make an enormous difference and so this is why the government is focused on reducing these debt levels. Making sure that there's a surplus so that the debt doesn't continue to climb and that these debt servicing costs will be reduced in the future,” Parry further said.
BUSINESS REPORT