South African Minister Of Finance Enoch Godongwana Delivers 2023 Budget Speech – News and updates from Finance Minister Enoch Godongwana’s 2023 budget speech to the National Assembly at City Hall in Cape Town.
Godongwana says direct disbursements are expected to increase to R92.7 billion from 2022. He says the increase is to help with emergency costs.
South African Minister Of Finance Enoch Godongwana Delivers 2023 Budget Speech
“These cuts relieve some of the financial strain on free basic services, particularly health, education and the rising costs of providing those services.”
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The minister said R695 million was available for emergency relief for recent floods and national disasters declared in several provinces this financial year, with another R1 billion next year.
“The National Treasury will work with the President on specific proposals to make savings through the rationalization or closure of public institutions. They will make recommendations to the President and Cabinet and should be part of the next budget.”
• The National Prosecution Authority receives R1.3 billion to support the implementation of the recommendations of the State Captivity Commission and the Financial Action Task Force.
• The Investigation Division has been allocated R100 million to initiate a civil procedure in a special court because of the disclosures concerning the recommendations of the State Detention Commission.
South Africa’s Finance Minister Enoch Godongwana Speaks With South Africa’s President Cyril Ramaphosa Ahead Of Presenting His 2022 Budget Speech In Cape Town, South Africa, February 23, 2022. Reuters/shelley Christians Stock Photo
• Seniors and Disability Grant increased by R90 from 1 April 2023 and R10 from 1 October 2023. As a result, the overall growth of R2090,
• Child support grant increases from R480 to R510 on 1 October 2023, while child support increases from R1070 to R1130,
• Health and basic education will receive R23 billion and R22 billion respectively to close the gap in the compensation budget and improve services.
The minister said that due to the difficult business environment for the sugar industry due to floods and social unrest, “the healthcare building will not change in two financial years to diversify or restructure the industry”.
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The minister said after consultation, the government intends to publish a revised bill on the “two-pot” pension system. “This system will include details of the amount that will be available immediately from March 1, 2024. Withdrawals from the available ‘savings pot’ will be taxed as income for the year of withdrawal.”
“To ease the impact of the electricity crisis on food, the RoadAccident Fund will provide reimbursements to food producers for diesel used in industries such as generators. This will take effect for two years from April 1, 2023.”
“The improvement in revenue is due to higher collection of corporate and personal income tax and customs duties,” Godongwana said.
“This is R93.7 billion higher than the 2022 budget estimate and R10.3 billion higher than the MTBPS 2022 estimate. The medium-term revenue estimates are R6 billion higher than the MTBPS 2022 estimate. As a result, there is no tax proposal. This is the budget.”
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“The largest portion of this, approximately $448 billion, will be spent through state-owned companies, NGOs and public-private partnerships.”
Transport and logistics will spend an estimated R351.1 billion, including Sanral, to improve the road infrastructure system. Water and sanitation is expected to spend R132.5 billion during the next 3 years, mainly through water boards.
“From March 2023, businesses can deduct 125 percent of their taxable income from the cost of renewable investments. There will be no restrictions on the size of the projects, and the incentive measure will last for two years to encourage investment. In the short term . . .
The minister said he can claim 25 percent of the cost of the panels, up to a maximum of R15 000.
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“This can be used to reduce tax liability in the fiscal year 2023/24. This incentive will last for one year.”
The minister revealed that by the end of 2022, municipalities owed Eskom R56.3 billion. Godongongwa says taking on Eskom’s debt without addressing municipal debt risk would be counterproductive.
We are working with Eskom to solve this problem, where Eskom will provide incentives to municipalities that cannot afford to borrow. However, concessions will be subject to conditions. Over time, the relief will include measures such as installing pre-paid meters in these municipalities to prevent defaults and streamline operations. “
Implement recommendations from the independent evaluation of Eskom’s operations commissioned by National Treasury.
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“The details of the loan relief and the reasons for the conditions are set out in full in the online appendix.”
“The second is a direct takeover of approximately R70 billion of Eskom’s debt portfolio in 2025/26. Due to debt relief, Eskom will not need to continue the subsidy period.
“The government will finance the deal through a main provision of R66 billion announced in the 2019 budget and additional borrowing of R118 billion over the next three years.”
The minister said that the lack of reliable electricity supply remains the biggest economic constraint. The minister said that the government is working to provide more capacity in the grid. “We are working to reform the electricity sector to achieve long-term energy security.”
South Africa’s Finance Minister Enoch Godongwana Arrives Ahead Of Presenting His 2022 Budget Speech In Cape Town, South Africa, February 23, 2022. Reuters/shelley Christians Stock Photo
“Two years ago, we launched Operation Vulindlela, a separate initiative of the President and the National Treasury to accelerate the implementation of structural reforms by promoting cooperation and coordination. Since its inception, Operation Vulindlela has made rapid progress in monitoring priority areas such as electricity, water, telecommunications, transport and immigration.”
Godongwana estimates that debt service costs will average R366.8 billion annually in the medium term and R397.1 billion in 2025/26.
“These are resources that could otherwise be used to address important social needs or to invest in our future. There are risks in the financial outlook. These include a worsening economic outlook, a further weakening of the financial position of state-owned companies, and the possibility of unfavorable public service wage contracts.”
The finance minister said the government’s debt to Eskom would stabilize at just above 73.6 percent of GDP in 2025/26.
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“This is three years later than expected in the 2022 medium-term budget policy statement. Overall, public debt is very high. The total debt stock will increase from R4.73 trillion in 2022/23 to R5 .84 billion in 2025/26.” “Because we have so much debt, our debt service costs are so high.”
Godongwana said the current fiscal year’s core fiscal surplus will be maintained over the medium term.
“This is an important political position. We also need to consider a consolidated position that includes debt service costs. In this context, the consolidated fiscal deficit is projected at 4.2 percent of GDP for 2022/23, which is 3, It will to 2. .cent in 2025/26.”
“The fiscal consolidation strategy we adopted a few years ago mainly limited the growth of consumption expenditures and allowed us to use a higher than expected share of revenue to reduce the deficit. As a result, we reduced the tax deficit without use the tax deficit. In addition, the reduction of social wages and infrastructure.
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Although the country’s economy is expected to grow by 2.5 percent in 2022, Godongwana says the medium-term growth outlook has worsened.
Real GDP growth is expected to average 1.4 percent from 2023 to 2025, compared to an estimate of 1.6 percent in October.
“Our pursuit of high growth remains based on three pillars. First, we provide a stable macroeconomic framework to create an environment conducive to economy, investment and growth. Second, we implement growth-promoting reforms in key sectors, especially energy and transportation . Third. , the high state “We will strengthen our capacity to provide quality public services, invest in infrastructure and fight crime and corruption.”
“The global recovery is slowing down. Domestically, the load shedding has become more persistent and prolonged, affecting the provision of services and threatening the survival of many businesses.”
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What should Finance Minister Enoch Godongwana do to address the rising cost of living for South Africans? Finance Minister Enoch Godongwana is doing the politically unpopular job of explaining in his first budget on Wednesday how debt relief will increase social spending. We know it will happen because the president said so.
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The [Minister of Finance] will explain in detail what we need to do and what we need to do in our Debt Servicing Budget. He’ll do it, so we’ll all appreciate it better.”
Ramaphosa told MPs before the campaign: “As government spending has increased rapidly, spending increases have reduced benefits and our debt service costs have fallen to the point where social costs are increasing.”
This was repeated by Sona on February 10
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