GOOD Statement by Brett Herron,
GOOD Secretary-General & Member of Parliament
21 February 2024
Despite acknowledging that our economic growth rate is projected to average only 1.1% over the next few years the Minister of Finance, Enoch Godongwana, kept things safe in the Budget Speech he delivered today.
A low economic growth rate is a crisis and deserved a coherent plan.
With an election on the horizon, the Minister announced no major increases to tax rates, no bailouts for state-owned entities, no plan to relieve the suffering of those without livelihoods – but enough money to fill gaps in the civil service wage bill that were created last year.
South Africa’s anticipated 1.1% growth rate over the next few years is way below the 5-6% growth needed to begin to turn the economy around, and way below Africa’s and the world’s growth rates.
Growing our way out of trouble required the Minister to present a coherent economic growth plan. What we got, instead, was tinkering around the edges.
The paltry increases to some social grants, but not others, and the continued avoidance of introducing a Basic Income Grant, demonstrates that reducing poverty was de-prioritised in this year’s budget.
The structure of the budget is a constraint. Adding this or that percentage point to each of last year’s line items amounts to applying sticky plasters when open heart surgery is indicated. The structure lacks dexterity, and ties Minister Godongwana’s hands.
Zero based budgeting is urgently required if we are to break the structural constraints of the budget.
We don’t have much money, so we need to make better choices in how we prioritise spending what we have.
Using the country’s gold and foreign currency reserves to reduce our debt burden is a good crisis strategy. The country keeps reserves for extreme crises, which the rates of unemployment and poverty now present. Having to spend less on debt repayments frees up cash for pressing needs.
The Reseve Bank Act provides for transfers of profits from the reserves to the State Revenue Fund.
This decision is a demonstration of how government budgeting is about choices… in this instance the choice to use our reserves to prevent imposing severe austerity measures at a time of enormous financial stress.
Arguably the best news in the budget was that R943 billion has been set aside for infrastructure.
Media Enquiries:
Brett Herron, GOOD Secretary-General & Member of Parliament
Cell: 082 518 3264
Email: bretth@forgood.org.za
Janke Tolmay, GOOD Media Manager
Cell: 073 367 1223
Email: janke@forgood.org.za