After Finance Minister Enoch Godongwana has presented the 2024 Medium-Term Budget Policy Statement to Parliament, the question that many South Africans have is, what happens now? Picture: Armand Hough / Independent Newspapers
Now that Finance Minister Enoch Godongwana has tabled the Medium-Term Budget Policy Statement (MTBPS), the question on the minds of many South African is what happens next?
The MTBPS lays out the policy framework for the annual Budget that will be presented by the Finance Minister in February, offers updates on economic forecasts from the National Treasury and estimates the budget numbers for the medium-term.
It also adjusts the budgets of government departments for the current financial year as well as makes emergency changes to spending.
It is tabled three months before the national budget and immediately after the Budget Review and Recommendation Report (BRRR) process, where the annual reports by departments are reviewed.
According to the National Treasury, after the MTBPS has been tabled, Parliamentary Committees (Appropriations and Finance) hold public hearings with stakeholders, receive submissions and then prepare a report for review by the National Assembly (NA).
Thirty days after the tabling of the MTBPS, the finance committees of the two Houses - the NA and the National Council of Provinces (NCOP) - must report on the proposed fiscal framework.
Treasury said that the Appropriations committees must report on the proposed division of revenue and grant allocation to provinces and local governments.
The Division of the Revenue Amendment Bill (DORA) is then considered.
According to Andre Cilliers, Currency Strategist, TreasuryONE, the MTBPS confirmed that fiscal consolidation remains a priority for the government, although tax revenues were weaker than expected.
“The National Treasury used conservative growth projections, keeping debt-to-GDP and budget deficit forecasts realistic,” Cilliers said.
“Additionally, the government’s funding strategy will involve tapping offshore markets, which should alleviate pressure on the local bond market.”
Cilliers said that Godongwana’s MTBPS signalled an end to bailouts for state-owned enterprises while stressing a move towards capital investment and private sector inclusion in infrastructure projects.
The MTBPS stressed the need to focus on macroeconomic stability, supporting and stimulating economic growth and implementing structural reforms, according to Andrew Golding, chief executive, Pam Golding Property group.
Golding said that the MTBPS which offered encouraging comments regarding public-private collaboration is expected to help create stability and boost sentiment towards South Africa from both an international as well as local market perspective.
Cilliers said that investors expect further reform announcements in February’s budget, especially if government intends to implement structural changes.
“Given the constrained fiscal environment, reforms around SOE efficiency, infrastructure upgrades, and municipal sustainability will be crucial,” Cilliers said.
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