This year’s Medium-Term Budget Policy Statement (MTBPS) will be presented at 2pm on Wednesday and plays an important role by providing a mid-year review of South Africa’s fiscal performance.
Why should you pay attention?
The speech informs South Africans if the targets that government set in the February Budget have been met and what needs to be implemented in the coming year.
The statement also recalibrates the Medium Term Expenditure Framework (MTEF), offering insights into shifting priorities and the impact of government’s fiscal planning, according to Casey Sprake, an investment analyst at Anchor Capital.
This year’s MTBPS is being presented amid a moderately improved economic outlook and the establishment of the Government of National Unity (GNU).
Business sentiment is rebounding as political and policy uncertainty ease, according to Nedbank’s Economic Review.
The bank said that government’s focus is firmly on service delivery, with the crowding-in of the private sector in the large infrastructure projects being prioritised.
South Africa has a fiscal consolidation issue as it is expected that the nation’s debt will rise to around 75.3% of gross domestic product (GDP) in 2025-26. The country’s debt accounted for 74.6 % of nominal GDP in June 2024.
"A R100 billion drawdown has helped stabilise the fiscal position in the context of fiscal consolidation,” said Investec Treasury Economist Tertia Jacobs told Bloomberg.
But South Africa's debt trajectory has improved as National Treasury has tapped into the country’s contingency reserves.
Finance Minister Enoch Godongwana will have to address these issues during the MTBPS and where SA stands when it comes to its debt burden.
What should South Africans be looking for during the statement?
Sprake noted that there are several items that Minister Godongwana needs to discuss on Wednesday.
Sprake’s wish list:
- A credible plan that brings debt accumulation under control.
- A demonstration of additional measures to improve the ease of doing business in SA.
- A credible turnaround plan for Transnet.
- Further details surrounding potential liabilities of the Road Accident Fund (RAF), as well as other SOEs, which are currently in distress, including Denel, the Land and Agricultural Development Bank of SA (Land Bank), the SA National Roads Agency (Sanral).
- Detailed plans to address the financial distress of municipalities nationwide and the subsequent
- Turnaround plans for SA’s failing water boards — municipalities that owe the water boards R21 billion are also seeking debt relief.
- Clarity surrounding the future of the Social Relief of Distress (SRD) grant.
- Clarity around the proposed NHI and the required funding sources.
- An update on SA’s progress towards exiting the Financial Action Task Force’s (FATF) grey list.
Health needs to be a priority
According to the Board of Healthcare Funders (BHF), Godongwana needs to address medical schemes and create low-cost benefit options for South Africans.
This should be addressed as government has yet to fully explain how it will implement and fund the National Health Insurance (NHI) Act.
Currently, just over nine million South Africans belong to a medical scheme, with 68% coming from previously disadvantaged groups, according to BHF.
The BHF estimates that an additional 10 million people from low-income households could have access to private healthcare coverage if medical schemes were permitted to offer low-cost benefit options (LCBOs).
LCBOs are pared-down medical aid packages that offer essential primary healthcare services.
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