KwaZulu-Natal: Finance MEC Francois Rodgers has welcomed the 2024 Medium Term Budget Policy Statement (MTBPS) presented by Finance Minister Enoch Godongwana. The Minister tabled the MTBPS in Parliament on Wednesday. Rodgers noted that the budget accounts for necessary cost-containment measures, given the challenges of the national fiscus, while ensuring that essential spending areas are not compromised.

According to South African Government News Agency, Rodgers drew inspiration from President Cyril Ramaphosa’s outline of priorities for the Government of National Unity. Rodgers highlighted that Godongwana asserted the government will continue to drive inclusive growth and job creation. He mentioned that the MTBPS was conservative and took into account the current economic climate, with projected economic growth at 1.1%, which remains weaker than ideal for a country with a growing population.

Rodgers welcomed the infrastructure reforms announced by the Minister, seeing them as aligned with the government’s mi
ssion of ensuring inclusive growth, job creation, and building a capable and ethical state. Government debt is projected to reach more than R6.05 trillion, or 75.5% of GDP, by 2025/26. National Treasury expects improved growth prospects for the South African economy, despite a slowdown to a projected growth of 1.1% in 2024, down from 1.3% earlier this year. Real GDP growth is projected to improve from 0.7% in 2023 to 1.1% in 2024.

The MTBPS highlighted that economic growth is being weighed down by stop-start economic growth and stubborn inflation in the first half of the year. Minister Godongwana stated that debt-service costs will reach R388.9 billion in the current financial year. To address this unsustainable debt increase, National Treasury plans to restrain spending and maintain stable tax collection. Against the backdrop of national debt, Rodgers welcomed the approach taken by National Treasury.

Rodgers identified the bloated government wage bill as the biggest challenge, noting that the government’s
proposed 4.5% wage increase is at odds with unions’ demand for a 14% increase. He called for a clear and decisive policy to address the excessive wage bill. A resolution at a recent budget council meeting determined that provinces would not face an unfunded wage agreement as in the past, with the increased wage agreement funded by National Treasury.

Regarding the public sector wage bill, the government is expected to propose reigniting its early retirement program as National Treasury seeks to further manage the wage bill. Over the past decade, the wage bill has decreased as a share of consolidated spending, from 35.7% in 2013/14 to 32.1% in 2023/24, and is projected to decrease to 31.4% by 2027/28. To contain public service wage costs further, the government is proposing to reactivate early retirement without penalties, with an additional R11 billion allocated over the next two fiscal years. Details will be outlined in the 2025 Budget.

Rodgers also expressed support for the Minister’s approach to public-pr
ivate partnerships and cooperation with the private sector. A review of the government’s approach to this is expected to be tabled next month, which Rodgers looks forward to. He emphasized the relevance of private sector involvement at provincial and local government levels but noted that investors need to see the establishment of a capable and ethical state.