MTBPS 2024: Key Fiscal and Economic Highlights
The 2024 Mid-Term Budget Policy Statement (MTBPS) delivered by Finance Minister Enoch Godongwana did not feature major bailout announcements for South Africa’s state-owned enterprises (SOEs), aside from just over R5 billion allocated in the Special Appropriation Bill, specifically targeting the South African National Roads Agency (Sanral).
While this may come as a relief, the country's revenue shortfall paints a less optimistic picture. South Africa is facing a tax revenue deficit of over R22 billion this year, as the South African Revenue Service (SARS) fell short of National Treasury’s targets. Consequently, the country's debt-servicing costs have escalated, increasing pressure on public finances.
Special Appropriations and Debt Allocation
The MTBPS included R5.12 billion in special appropriations, covering Sanral's debt related to the Gauteng Freeway Improvement Project and South Africa's case against Israel at the International Court of Justice.
Although no major SOE bailouts were announced, similar to last year’s MTBPS, Godongwana previously had to extend financial aid to Transnet in the main February budget after considerable pressure.
Departmental Budget Changes
Increased budgets were allocated to Home Affairs, Social Development, International Relations, and The Presidency, while departments like Water Affairs and Higher Education will see cuts this year.
Additional Highlights and Economic Outlook
Reduced Revenue Forecast: The main budget revenue estimate for the next two years is reduced by R31.2 billion.
Debt Levels: National debt is expected to exceed R6.05 trillion, or 75.5% of GDP, by 2025/26.
Debt-Servicing Costs: Expected to reach R388.9 billion this fiscal year.
Budget Deficit: The main budget deficit is projected to narrow from 4.7% of GDP in 2024/25 to 3.4% by 2027/28, with the primary budget surplus increasing to 1.8% of GDP.
Debt Stabilization: The primary surplus is anticipated to stabilize debt at 75.5% of GDP by 2025/26.
Medium-Term Spending: Consolidated expenditure is expected to grow from R2.4 trillion in 2024/25 to R2.8 trillion in 2027/28.
Tax Collection Shortfall: Tax revenue for 2024/25 is expected to be R22.3 billion below the February budget estimate.
GDP Growth Forecast: Real GDP growth is revised to 1.1% for 2024, lower than the 1.3% estimated in February. Over the medium term, GDP is expected to average 1.8%.
Public Sector Wage Management: R11 billion will be allocated over the next two years to support early retirement initiatives, aiming to reduce the public sector wage bill.
The 2024 MTBPS reflects a cautious fiscal approach, addressing necessary debt obligations and modest departmental increases while working towards long-term fiscal stability.