Finance Minister Enoch Godongwana says government debt is projected to be more than R4.7 trillion in the current financial year, compared to R627 billion in 2008\/09.
\nThis debt, he said, was incurring debt-service costs that will average R355.2 billion per year over the medium-term expenditure framework.
\nHe said: \u201cThe global economy is slowing, inflation is increasing, and financial markets are becoming more volatile. The result is that the debt-service costs are estimated to be R5.9 billion higher in 2022\/23 than what we thought at the time of the February budget.
\nMoreover, the possibility of a major price correction in financial markets is a significant risk.
\n\u201cThis will affect fiscal revenues going forward,\u201d he said.
\nThe Minister told Members of Parliament that the country\u2019s medium-term strategy needed to maintain a prudent approach to fiscal policy.
\n\u201cWe need to decrease our debt burden and debt-service costs by reducing our annual deficits. This will stabilise the public finances and reduce the fiscal risks.\u201d
\nIn this regard, he said progress was being made.
\n\u201cA consolidated fiscal deficit of 4.9% of GDP is projected in 2022\/23. This will decline to 3.2% of GDP by 2025\/26. A primary fiscal surplus of 0.7% of GDP will be achieved in 2023\/24. This is one year earlier than projected at the 2021 MTBPS. We also now expect gross government debt to stabilise at 71.4% of GDP in 2022\/23 \u2014 two years earlier, and at a lower level, than projected in the 2022 Budget Review.
\n\u201cAmong other things, this means that we are proposing that no budget reductions are implemented in the 2023 Budget. In fact, consolidated government spending will exceed R2.2 trillion this year and will rise to R2.5 trillion in 2025\/26.
\nMedium-term fiscal strategy
\nIf National Treasury projections are anything to go by, the South African government will in the next financial year achieve its first primary budget surplus in 15 years.
\nThe department in Godongwana\u2019s 2022 Medium Term Budget Policy Statement (MTBPS) said over the past several years, government\u2019s efforts to stabilise debt and narrow the budget deficit were interrupted by a series of shocks that required urgent fiscal allocations \u2013 most notably by the near collapse of Eskom in 2019\/20 and the COVID-19 pandemic in 2020\/21.
\nIn the document, which Godongwana delivered to the National Assembly on Wednesday, the Treasury said the pressures were managed primarily by reallocating funding within the budget and establishing firm expenditure ceilings.
\nIn this regard, the department said the medium-term fiscal strategy prioritises:
\n\u2022\tAchieving fiscal sustainability by narrowing the budget deficit and stabilising debt.
\n\u2022\tIncreasing spending on policy priorities such as security and infrastructure, thereby promoting economic growth.
\n\u2022\tReducing fiscal and economic risks, including through targeted support to key public entities and building fiscal buffers for future shocks.
\nOver the next three years, the Treasury said spending increases would support economic growth and the delivery of health, education and local government free basic services.
\n\u201cMain budget non-interest spending will grow slightly above CPI inflation in 2024\/25 and 2025\/26 as more resources are added to key baselines for delivery of services, infrastructure, and safety and security \u2013 and funds are set aside to reduce fiscal risks.<\/p>\n
Source: South African Government News Agency<\/p>\n","protected":false},"excerpt":{"rendered":"