South Africa's Budget Speech 2023 Delivers on Some Key National Priorities- but a Few Thorny Issues Remain Unresolved

SOUTH AFRICA - In Brief 22 Feb 2023 by Iraj Abedian

---

The much anticipated Budget Speech 2023 was delivered by Minister Enoch Godongwana, highlighting the positive and better than anticipated tax revenue receipts due to better collection capability on the part of the SA Revenue Services (SARS), and sustained by rising corporate income tax largely but not exclusively from the heightened commodity prices. SARS managed to collect R90 billion more than budgeted. This enabled the Budget to raise some expenses without putting pressure on the deficit. However, the deficit/GDP ratios are fairly optimistic based on medium term GDP growth projections that may not realize in the context of the global and domestic head winds facing the SA economy. This has been a trend over the past few years where at the Budget Speech time the GDP is projected at higher than what it turns out to be. The highlight of this year’s Budget Speech was the decision on taking over Eskom’s massive debt. The Budget proposes for the National Treasury to take on R254 billion, or almost 67%, of Eskom’s debt over the next three years. This will enable Eskom to avoid any further borrowing in the capital markets. Furthermore, the debt of the local government authorities to Eskom has been left unresolved. This could be another thorny issue before Eskom’s finances could be finally put to bed. Despite repeated undertaking not to subsidies State-Owned Enterprises (SOEs), this Budget once again offered subsidies to SA Post Office and South African Airways. On the positive policy changes, the Minister delivered on the President’s promise in his 2023 State of the Nation Statement on government subsidies for businesses and households transitioning to solar energy, or more ...