Budget 2024: Not much wiggle room for Godongwana, with national debt at R5 trillion

The South African government is grappling with a substantial burden of national debt, which has surged to a staggering R5 trillion as of November 2023. This significant financial obligation poses a formidable challenge as the government seeks to navigate its fiscal responsibilities and ensure economic stability for the nation.

Economists at PwC have thus predicted that about 20% of the 2024 national budget will need to go to servicing this debt to give credibility to South Africa’s fiscal integrity.

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Expenditure restraint

For this reason, PwC says that the finance minister will continue to show strong expenditure restraint as far as possible.

Minister of Finance, Enoch Godongwana will be delivering his 2024 national budget speech next week on 21 February.

Presently, within the current economic landscape, the notable factors posing substantial risks to expenditure relate to state-owned enterprises (SOEs), with specific emphasis on entities such as Eskom and Transnet, alongside the considerable burden presented by the public sector wage bill.

Lullu Krugel, PwC’s South Africa Chief Economist and Africa Sustainability Platform Leader, emphasised the need for the minister to show current fiscal discipline as well as to illustrate how the government planned to maintain fiscal discipline.

She outlined two significant challenges currently confronting National Treasury.

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SOEs debt

One is the chance that the government might end up responsible for the debts of SOEs. The other is that there’s a growing chance the government might have to pledge to cover even more of the debts of these SOEs.

“Both of these things could make the country’s overall debt situation even worse,” she said.

“Our wish is that the stringent conditions for these guarantees and transfers of debt from SOEs to the National Treasury are upheld to indicate fiscal sustainability,” she said.

Krugel said they expect the minister to announce progress in the amount of debt that has been transferred and guaranteed, whether the conditions have been met, and what actions have been taken with regard to SOEs that are not meeting the set conditions.