The economic outlook provided in the speech covers both global and domestic perspectives. Globally, moderate growth of 3.2% is forecasted for 2025, attributed to growth in the United States and emerging economies, but there are downside risks due to potential conflicts and faltering growth in China.

However, South Africa’s near-term growth remains constrained by lower commodity prices and structural challenges, with an estimated GDP growth of 0.6% in 2023, projected to average 1.6% between 2024 and 2026. Challenges include electricity supply constraints and high sovereign credit risk.

Fiscally, the government aims to support growth while ensuring fiscal sustainability. The budget deficit is estimated to worsen to 4.9% of GDP for 2023/24, leading to higher debt-service costs. Measures include reducing non-interest expenditure, increasing revenue, and reforming the Gold and Foreign Exchange Contingency Reserve Account. Despite these efforts, debt is projected to peak at 75.3% of GDP in 2025/26.

Structural reforms are underway to address challenges in sectors like electricity and logistics. Initiatives include increasing the limit for renewable energy projects and introducing smart prepaid meters to address electricity supply issues, as well as implementing the Freight Logistics Roadmap to improve port infrastructure and rail networks.

Infrastructure financing and delivery reforms are introduced to optimize the infrastructure value chain and attract private sector participation. This includes amendments to the PPP regulatory framework and the introduction of infrastructure bonds and concessional loans.

Climate finance is being mainstreamed, with a focus on managing fiscal risks associated with climate-related disasters and leveraging concessional funding. The government is also supporting the production of new energy vehicles and promoting procurement transformation to drive sustainable development.

Revenue trends and tax proposals aim to alleviate fiscal pressure, including above-inflation increases in excise duties for alcohol and tobacco products and a carbon tax increase. However, there are no increases in the general fuel levy for 2024/25 to provide tax relief for consumers.

Significant spending allocations are made for education, health, public transport, job creation, and law enforcement, with a focus on maintaining critical services and supporting economic recovery. Division of revenue prioritizes funding for provinces and municipalities, with additional allocations to cover wage agreements and disaster recovery efforts.

Looking ahead, South Africa’s hosting of international events like the G20 presents opportunities to advance economic and developmental issues, with a focus on placing Africa’s development at the forefront of the agenda.

• Despite increasing pressure to hike taxes to balance the government’s books, no major tax increases were announced
• No VAT hike, no clear wealth tax, and no increases in the fuel levy & Road Accident Fund levy
• National Treasury will tap into SA’s Gold & Foreign Exchange Contingency Reserve Account (GFECRA) for the first time in two decades
• Government is sticking to the the fiscal strategy outlined in the 2023 Medium-Term Budget Policy Statement (MTBPS). It will achieve a primary budget surplus in 2023/24, with debt stabilising by 2025/26
• Debt-service costs will peak as a share of revenue in 2025/26 & decline thereafter
• The consolidated budget deficit is projected to narrow from 4.9% of GDP in 2023/24 to 3.3% by the end of the 2024 medium-term expenditure framework (MTEF) period

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