The minister pointed out in the MTBPS that government debt is too high although there was a budget surplus for the first time in 15 years.
Although Finance Minister Enoch Godongwana disappointed citizens who wanted a basic income grant and more basic foods to be exempted from value-added tax , he did not include any bailouts for state-owned enterprises in the Medium-Term Budget Policy Statement and allocated money for early-retirement packages for public servants to control the public servant wage bill.
He said to deal with this problem, government have taken difficult steps to reduce the budget deficit by restraining spending and maintaining stable tax collection. “As a result of our measures, government achieved a primary budget surplus in 2023/24, for the first time in 15 years. The surplus is needed for us to stabilise debt.”
Debt service cost will grow at an annual average of 6.9%, lower than the 7.3% expected in the February budget. A primary budget deficit will be maintained for the next three years and will double from about R75.3 billion in the next financial year to R166.7 billion in the 2027/28 financial year. Lower revenue collection was due to a decrease in VAT collection of 4.5% as people imported less equipment for alternative power as Eskom reduced load shedding, while income from the fuel levy decreased by 3.9% due to a lower demand for fuel and a large once-off rebate on diesel of R9 billion that had to be repaid this year.
Public Private Partnership regulations will be amended to simplify requirements for undertaking these projects and the amended Treasury Regulation 16 will be published before the end of November for implementation in 2025/26. The Municipal PPP Regulation 309 will be finalised by June next year.
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