Business Unity South Africa (BUSA) expectations of the Medium-Term Budget Policy Statement 2023
31 October 2023
The deteriorating state of public finances threatens the delivery of public services and puts the economic recovery of South Africa at risk.
The Minister of Finance, Enoch Godongwana, has warned that South Africa will run out of money by March 2024, unless it reduces its spending. This is a dire warning that must not escape the attention of the rest of the government, unions, political parties, businesses, civil society, and ordinary citizens.
South Africa has increasing expenditure and decreasing revenues which places the sustainability of its capacity to service its debt in question. As of June 2023, South Africa’s debt to GDP ratio was 72,7% up from 70,9% in the previous quarter. The cost of servicing the debt is now the single largest expenditure item in the budget. At the same time, the South African Reserve Bank has forecast a mere one percent growth in gross domestic product (GDP) in 2024, which is insufficient to generate the revenue needed for the social and economic expenditure of the country.
South Africa also has a growing tax revenue shortfall, in part because of weak household finances, low business confidence, low investment, lower global commodity prices, and a weak rand. Consequently, BUSA recommends the following for the MTBPS: