By Vusuthando Percyvil Dube
Presenting the 2024 Medium-Term Budget Policy Statement (MTBPS) on Wednesday, Finance Minister Enoch Godongwana emphasized a cautious approach as South Africa struggles with a weak economy and growing public discontent over the funding of social services. The declaration was made in the midst of demonstrations called for by civil society organizations and labor unions, who wanted a more progressive budget to address urgent economic disparities.
In his statement, Godongwana acknowledged the challenging economic landscape, revising the growth forecast for 2024 down to 1.1%, a decrease from the 1.3% anticipated earlier in the year. “While consumer inflation has notably eased and confidence appears to be on the rise, ongoing logistic crises remain significant hurdles to robust economic performance,” he stated. The National Treasury anticipates modest growth averages of 1.8% from 2025 to 2027, marking a cautious recovery phase.
A focal point of contention in the budget has been the absence of additional bailouts for state-owned enterprises (SOEs). Notably, the South African Post Office, which sought R3.8 billion to avert liquidation, received no support, putting its 657 branches and 6,208 jobs at risk. Godongwana noted, “We must prioritize the fiscal health of the nation, and immediate bailouts cannot be the answer.”
The budget also sidestepped the contentious issue of permanent social grants, with the Minister reiterating that any such move hinges on substantial increases in revenue. “We will explore proposals for reforming our welfare system in the upcoming 2025 Budget,” Godongwana said.
Moreover, the government wrestles with a spiraling public sector wage bill, projected to rise by R145 billion over the next three years, with R48.4 billion earmarked for public servant pay increases in 2025/26. To alleviate the burden, the government is considering voluntary early retirement packages, aiming to save up to R11 billion.
South Africa’s debt continues to present a significant challenge, with projections showing public debt soaring from R5.6 trillion in 2024/25 to R6.8 trillion by 2027/28. The International Monetary Fund’s call for a debt ceiling has yet to receive government commentary, but discussions with stakeholders are underway.
Despite efforts to remedy the fiscal situation, the Treasury has reported weaker-than-expected tax revenue, revising the 2024/25 estimate down by R22.3 billion. Godongwana highlighted that while corporate tax and VAT collections are expected to exceed projections, declines in personal income tax stemming from the declining energy crisis will weigh on overall revenue.
At the same time, South Africans witnessed an outpouring of discontent outside Parliament as trade unions and social movements held a march to demand accountability and substantive budget reforms. The event was led by COSATU General Secretary Solly Phetoe, who criticized the government’s austerity measures. “Austerity is not just an economic policy; it is a statement about whose lives and well-being matter,” he asserted, emphasizing the disproportionate impact on marginalized communities.
Protesters gathered early in the day, with leaders, including Zingiswa Losi (COSATU President) and Zwelinzima Vavi (SAFTU General Secretary), rallying for investment in essential public services and an end to budget cuts. Vavi highlighted, “When the government cuts funding for essential services, it’s not just reducing numbers in a budget. It’s taking away life-saving healthcare, quality education, and safety from our communities.”
The marching crowd echoed demands for comprehensive reforms, including the implementation of a Basic Income Grant, funding for public services, and the reversal of budget cuts affecting education and healthcare.
The budget announcement reflects the ongoing tension between government fiscal responsibilities and the pressing needs of society. As South Africa faces a daunting path toward recovery and equity, the need for a robust, people-centered fiscal strategy remains urgent, resonating in both government halls and the streets where citizens continue to mobilize for change.
Photo: VOCfm
