The no-frills mid-term budget read

It’s a big numbers day, but who has the time? Here’s the Currency mid-term budget listicle of the stats you need to know (and a few you wish you didn’t).
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We’ve condensed Wednesday’s medium-term budget into a snappy list of 10 things you need to know. 

  1. We desperately need growth, but we’re just not getting it. In 2024, National Treasury reckons GDP will grow all of 1.1%. That’ll shoot up (just kidding) to 1.8% per year over the next three years. Meanwhile, the world is averaging 3.2%. Houston, we need those reforms and we need them stat. Incidentally, Treasury admits it’s being conservative: it says it’s been burnt before by overpromising and underdelivering. “You’re putting yourself in a very difficult position if you overestimate growth and make spending decisions against that,” director-general Duncan Pieterse said on Wednesday.   
  1. We’re deeply in debt: in 2008/09 we had R627bn of borrowings; that’s gone up to R5.26-trillion – or 74.1% of GDP. Our debt levels are 18.5% higher than the median for emerging markets. Our debt now costs us 21.6c in the rand. That’s bad. But it goes back to point 1. Our challenge, said finance minister Enoch Godongwana, “is a growth problem”.  
  1. Okay, so what’s the plan? We’ll “stabilise” this debt at 75.5% of GDP by 2025/26. It means the budget deficit will narrow to 3.2% of GDP by 2027/28, from 5% of GDP in 2024/25. Treasury also has a plan to keep our borrowings in check by running primary budget surpluses for the next decade (that is – the difference between what government spends, excluding debt-service costs, and what it collects in taxes).  
  1. We’re truly a welfare state: over the next three years, almost 31% of the population will receive some form of social grant, excluding the Covid social relief of distress grant. Our social security spend far outstrips that of our emerging market peers; it averaged 4.6% of GDP between 2015 and 2020, compared to an average of 1.6% for other developing nations. That means we’re spending six of every R10 (excluding debt costs) on the “social wage” – health, education, social protection. Still no news on a basic income grant though (that has to be accompanied by a permanent source of revenue, says Treasury).  
  1. Forget Eskom, South Africa has a new car crash: the Road Accident Fund. It’s staring down a rise in provisions from R352.8bn this year to a colossal R422.6bn in 2027/28. It’s expected to fork out an extra R40bn in claims by then – R89.7bn – but is only expected to earn R67.6bn from the fuel levy. 
  1. Actually, our municipalities are just as bad: they owe creditors R116.5bn (the majority of which is more than 90 days overdue), and they’re owed three times that: R339.9bn. Households are the big culprit here. 
  1. We’re spending too much on public servants. So we’ve come up with an early retirement plan to cut costs. This is one of the few positives in the budget. More on that here.
  1. We’re not spending enough on gross fixed capital formation (building stuff, like factories). Scarily, that’s forecast to contract this year – by 2.5%, having grown 3.9% in 2023. Still, Treasury is forecasting an average increase of 4.2% for the foreseeable future. 
  1. Our estimated gross tax take has been cut by R22.3bn for 2024/25. This needs its own mini list: it’s due to lower fuel levies thanks to a sharp drop in fuel demand, less VAT collected thanks to lower imports of energy-related components (like solar panels), less personal income tax because we’re under the whip, but a better haul from South Africa’s corporates. 
  1. And lastly, water, water everywhere (from the leaks) but ne’er a drop to drink. Not that we aren’t guzzling the H2O: 218l per person per day here, compared to the global average of 173l. “Critical reforms”, says Treasury, are needed to support water security and economic growth. It wants the private sector to get involved in stopping the leaks, and the Water Services Amendment Bill – which will allow national government to intervene in failing municipalities – is soon to be submitted to cabinet. Can’t come soon enough. 

Giulietta Talevi

A prominent voice in print and broadcast financial journalism with a sharp edge in market and company news. Former Financial Mail Money editor and BusinessDayTV anchor, Giulietta boasts an influential digital footprint that commands industry respect.

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