Finance Minister Enoch Godongwana with President Cyril Ramaphosa and Deputy President Paul Mashatile at the 2024 MTBPS. Picture: The Presidency/X
The Minister of Finance Enoch Godongwana showed in his Medium Term Budget Policy Statement (MTBPS) that government remains committed to achieving debt-stabilising primary budget surpluses. This is the view of Casey Delport, an Investment Analyst at Anchor Capital.
National Treasury is set to release a discussion document on potential alternative long-term fiscal anchors in March 2025.
Delport said while some fiscal slippage occurred compared to the 2024 Budget forecasts, it was largely in line with near-term expectations, though it exceeded projections slightly over the medium term.
“Notably, the MTBPS underscored a strong focus on growth and fiscal reforms. Although spending risks remain, including potential support for state-owned enterprises (SOEs, such as Transnet) and municipalities, Treasury has emphasised that it typically avoids direct bailouts for sub-national governments, opting for alternative support measures instead,” Delport added.
She added that while Treasury acknowledged that the issue of SOE bailouts persist, no additional funds have been allocated in the budget to address this.
State-owned companies continue to face financial strain and many remain unable to fund their operational and debt commitments fully.
“The medium-term fiscal strategy focuses on limiting further financial support to SOEs while addressing the debt obligations of Eskom and the South African National Roads Agency Limited (Sanral) to allow for critical investments in electricity and road infrastructure,” Delport added.
She argued that Godongwana and government’s overall fiscal strategy remains steady, yet the extent of slippage, though moderate, is disappointing.
“The combination of revenue shortfalls and a sharp rise in expenditures has resulted in a wider deficit in the 2024 MTBPS compared to the February Budget Review. Nevertheless, despite this larger fiscal deficit, the deficit trajectory shows improvement over the MTEF.”
She noted that the primary surplus for the main budget is expected to grow over the medium term to support debt stabilisation by 2025/2026, with the main budget deficit projected to decline from 4.7% of GDP in 2024/2025 to 3.4% by 2027/2028.
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