Minister: Mzansi swimming in skoloto!

FINANCE Minister Enoch Godongwana raises concerns about South African debt.

Delivering his Medium-Term Budget Policy Statement (MTBPS) in the National Assembly on Wednesday, 30 October, he warned that the debt is unsustainable.

"To achieve the goals of our fiscal strategy, we must better manage our debt. The debt has risen too fast and is too high. We are anticipating that government debt will reach more than R6 trillion or 75% of Gross Domestic Product in 2025/26," said Godongwana.

He said that debt service costs have become the largest component of government spending and are rising faster than economic growth.

"Debt service cost will reach R388,9 billion in the current financial year. Put differently, this means for every R1 of revenue that the government raises this year, 22 cents of it is paid in debt service costs. To deal with this problem, we have taken difficult steps to reduce the budget deficit."

On the revenue side, tax collection for the 24/25 financial year is expected to be R22.3 billion lower than anticipated in February.

"In the absence of faster growth and in the face of external risk, tax revenue will remain under pressure, forcing us to make difficult decisions on where to spend."

He said the government will be digitising and simplifying the application and disbursement process for social grants, broadening access to employment pathways, rolling out digital identification documents, building a centralised and accessible website for all government services, and digitising health records management for the rollout of National Health Insurance.

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The Treasury has avoided making the Social Distress Grant of R370 permanent or replacing it with a Basic Income Grant, as demanded by unions and community leaders.

The MTBPS plays a vital role in the overall budget process as it sets out the policy framework for the budget presented every February.

Godongwana noted that, as things stand, 50 of the 277 municipalities in the country have active financial recovery plans, while three are under national intervention: Mangaung, Enoch Mgijima, and Lekwa municipalities.

"The situation is untenable. And the reality is that national government cannot intervene in all municipalities at the same time."

However, he said several initiatives are underway to resolve local government systematic failures.

Godongwana also said that the formation of the Government of National Unity (GNU) in June, combined with the suspension of load shedding since March, a leap in business and consumer confidence, and the receding of inflation in recent months, has raised hopes. "Ours is to turn the promise of a better life for all into a reality," he said.