What you need to know about Godongwana’s mini-budget

Below are the highlights of South Africa’s 2024 medium-term budget policy statement released by Finance Minister Enoch Godongwana in Cape Town on Wednesday.

Forecasts

• The consolidated budget shortfall is forecast at 5% of gross domestic product for the current fiscal year through March. That compares with 4.5% in February and is bigger than most economists had forecast
• The shortfall is seen at 4.3% in 2025-26, narrowing to 3.6% by 2026-27 and 3.2% in 2027-28
• Spending of R2.51 trillion ($147 billion) is projected for 2025-26. Revenue collection is seen at R2.17 trillion
• The National Treasury remains on course to achieve a primary budget surplus – where revenue exceeds non-interest expenditure – in the current fiscal year and is projected to increase over the medium-term

Debt

• The debt trajectory is foreseen to deteriorate this year in part because of an expected tax revenue shortfall of R22.3 billion
• Gross debt is seen peaking at 75.5% of GDP in 2025-26, as opposed to the February forecast of 75.3%
• The gross borrowing requirement for the current fiscal year is seen at R424.7 billion. That compares with R457.7 billion envisaged in February
• The borrowing requirement is expected to grow to R602.7 billion in 2025-26, fall to R455 billion the following year, before climbing to R614.9 billion in 2027-28
• Domestic and foreign bond redemptions will average R211.5 billion over the next three years
• The Treasury intends to raise $3 billion from international financing institutions and capital markets in 2024-25 to meet its foreign currency commitments, and another $15 billion over the next three years
• The introduction of a binding fiscal anchor to ensure a long-term sustainable path for public finances is still under consideration, and the Treasury will release a discussion document on the issue by March.

Growth

• Economic growth is seen averaging 1.8% over the next three years, marginally higher than the 1.6% projected in February. A more stable energy supply and an anticipated increase in infrastructure investment contributed to the improved outlook
• GDP is expected to expand 1.1% this year, 1.7% in 2025 and 2026, and 1.9% in 2027
• Logistics challenges remain a constraint on growth

Spending

• Expenditure over the next two fiscal years will be a net R32.4 billion higher than was envisioned in February
• New allocations include: R11 billion to fund early retirement for civil servants; R13.3 billion to defray debts stemming from an abandoned toll road project in the central Gauteng province; and R3.5 billion to finance a peacekeeping mission in the Democratic Republic of Congo