By Karabo Marifi
Finance Minister Enoch Godongwana recently presented South Africa’s 2024 Medium-Term Budget Policy Statement (MTBPS) to Parliament, outlining key budgetary priorities for the coming fiscal year. The statement focuses on expanding non-interest expenditure to address immediate spending needs, especially in light of South Africa’s ongoing economic challenges. Godongwana highlighted rollovers from previous financial years and funding increases for urgent needs, including R2.7 billion for the COVID-19 Social Relief of Distress Grant and R2.1 billion for disaster relief. A significant appropriation has also been directed to the South African National Roads Agency (SANRAL) to address debts related to the Gauteng Freeway Improvement Programme (GFIP), with the Gauteng government contributing R3.8 billion towards the debt repayment.
The MTBPS underscores the government’s commitment to balancing immediate fiscal pressures with long-term sustainability. Debt-service costs, a major budget component, are expected to rise by an additional R6.7 billion over the coming years. These costs, largely due to high borrowing rates, are anticipated to increase further due to South Africa’s recent credit rating outlook and the persisting budget deficit, which is projected to narrow from 4.7% of GDP in 2024-25 to 3.4% by 2027-28. National Treasury’s debt management strategy aims to stabilise government debt over the next decade, driven by capital investment and a cautious approach to spending growth in non-critical areas.
A crucial area of concern in the MTBPS is the public sector wage bill. To contain costs, Godongwana has proposed reintroducing early retirement options without penalties, aiming to reduce payroll expenses while maintaining fair employment practices. Treasury has set aside R11 billion over the next two years for this initiative. Negotiations for the 2025-26 wage agreement are underway, with the government aiming to reach a balanced and sustainable consensus with labour unions by the 2025 budget. This approach reflects Treasury’s broader goal to maintain fiscal responsibility without compromising on service delivery and operational efficiency.
Godongwana’s statement also introduced a renewed focus on infrastructure development and public-private partnerships. Emphasizing infrastructure as a catalyst for economic recovery, the MTBPS outlines reforms to simplify procurement procedures and reduce delays. Additionally, Treasury has earmarked significant investments to support the production of electric vehicles (EVs), providing incentives to encourage private sector involvement in South Africa’s energy transition. This includes an investment allowance beginning in 2026, allowing producers to claim a substantial portion of qualifying investments in EV technology.
The budget policy statement underscores government’s continued efforts to address climate challenges, aligning fiscal policy with sustainability goals. The Climate Change Response Fund and other contingency funds are being restructured to ensure a more effective response to climate-related risks. Partnerships with multilateral financial institutions have already raised over $3 billion to support South Africa’s climate adaptation and energy transition initiatives, highlighting the country’s active role in global climate policy.
Finally, Treasury’s commitment to social protection remains a priority. However, the future of the COVID-19 Social Relief of Distress Grant remains undecided, with Treasury indicating that a sustainable solution would require either new revenue streams or reallocations within the existing budget. Discussions on the grant’s future will resume in early 2025, reflecting Treasury’s approach to gradually incorporate temporary relief measures into a more permanent social safety net if funding conditions allow.
In summary, South Africa’s 2024 MTBPS lays out a cautious yet responsive fiscal plan, balancing immediate social needs with long-term debt management and economic development goals. As Godongwana emphasized, fiscal discipline remains essential to ensuring the country’s financial stability while addressing urgent infrastructure and social needs    .
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