Finance Minister Enoch Godgonwana's full mid-term budget statement.
Madam Speaker, the strategic goal of this government is to reduce poverty, inequality andIt was former President Nelson Mandela who reminded us that; “Democracy will have littlewithin an expanding and growing economy.”Several long-standing structural impediments continue to hamper growth.• crime and corruption,• high levels of market concentration and barriers to entry that suppress the emergence and growth of small businesses.
It provides for spending adjustments to continue rebuilding lives and infrastructure following devastating flood damage earlier this year.It enhances the quality of public services such as Education and Health. The outlook contains many risks, notably further slowing global growth and higher inflation if the Russia-Ukraine war escalates.
Domestically, the robust pace of economic recovery in early 2022 was derailed by floods in various parts of the country, particularly KwaZulu-Natal and the Eastern Cape; industrial action in key sectors, and widespread power cuts.Over the next three years, the economy is expected to grow at an average of 1.6%.action to put our economy on a higher growth trajectory.
efforts to raise growth. We welcome the end of the Transnet strike and are working with Transnet leadership and all The next step is to complete digital migration to release these frequencies. The Minister of Communication and Digital Technologies will shortly indicate a new date for analogue switch-off. In the water sector, we have cleared the backlog of water-use licenses. The process to establish a water regulator through the National Water Resources
On general government, we are increasing on-budget infrastructure allocations to remedy the erosion of baselines. In addition, the investment plan supporting our energy transition was recently endorsed by Cabinet. We will take all necessary steps to ensure that our transition that is just.Madam Speaker, when government finances are saddled with debt it becomes very difficult to meet our development objectives. For nearly 15 years, the South African government has been tabling higher deficits. As a result, government debt is projected to be more than R4.
This will decline to 3.2% of GDP by 2025/26. A primary fiscal surplus of 0.7% of GDP will be achieved in 2023/24. This is one year earlier than projected at the 2021 MTBPS. We also now expect gross government debt to stabilize at 71.4 per cent of GDP in 2022/23 - two years earlier, and at a lower level, than projected in the 2022 Budget Review.
The better-than-expected revenue collection estimates, including over the medium term, have allowed government to narrow the deficit and mitigate lingering and new risks. Equally, it allows us to gradually restore the baseline budgets of departments key to the delivery of services, without making unaffordable permanent commitments.
Honourable Members, during the current financial year, wage negotiations have been taking place at the Public Service Coordinating Bargaining Council. On 30 August 2022 government made a final offer which emanated from a facilitation process. This offer includes the following: The fiscal framework also includes funding for the carry-through costs of the 2022/23 public service wage increases, as well as for safety and security, infrastructure investment and service delivery.
Madam Speaker, this is what is meant by trade-offs: balancing the need to address one priority over another. Overall, consolidated government spending is projected to increase from R2.21 trillion in 2022/23 to R2.48 trillion in 2025/26 at an average growth rate of 4%. Municipalities shape the living conditions of our people. They ensure that people have access to clean drinking water, energy, housing and sanitation. Yet several municipalities are dysfunctional, experiencing, either financial or leadership crisis, reflected in a general inability to deliver services.
We are also allocating additional funds to local government to support the delivery of free basic services to poor households, considering the rising cost of the free basic services, as well as rising bulk electricity and water costs.Addressing Risks from State-Owned Enterprises So, as balance sheets are being restored and those who looted and mismanaged then are being held accountable, including through the criminal justice system, we have little choice but to act to keep these key services running.
We are thus tabling a Special Appropriation Bill to provide additional funding to Denel, Transnet and SANRAL. These allocations will allow these entities to adjust their business models and restore their long-term financial viability. Gauteng will also cover the costs of maintaining the 201 kilometres and associated interchanges of the roads and any additional investment in road will be funded through either the existing electronic toll infrastructure or new toll plazas, or any other revenue source within their area of responsibility.
The debt takeover, once finalised, together with other reforms will ensure that Eskom is financially sustainable Further details of the programme will be finalised following consultations with all relevant stakeholders and lenders and will be announced in the 2023 Budget.Madam Speaker, we are working to strengthen our procurement and financial accountability system. We are also adopting best-practices in the procurement of goods and services, including the highest standards of transparency in the tendering processes.
In this regard, we will strengthen the auditing and preventative control systems, to enable managers to manage, while putting mechanisms to hold them accountable. The Commission of Inquiry into State Capture made recommendations aimed at strengthening the institutional, governance and accountability mechanisms.
Already we have tabled two bills in Parliament, aimed at addressing weaknesses in our legislative framework. The Bills are expected to be enacted by the end of this year.