Latest news with #R1-trillion
TimesLIVE
26-05-2025
- Business
- TimesLIVE
‘No one is out to get SA' — Calls for ruthless approach to courting investment
Deputy minister of finance Ashor Sarupen said with global investment flows tightening, South Africa would have to become more uncompromising in its efforts to draw investment for infrastructure development in the coming years. He was addressing a panel at the Sustainable Infrastructure Development Symposium South Africa (Sidssa 2025) in Cape Town on Monday afternoon. He said South Africa was competing with other emerging economies for capital and needed to be 'ruthless' about courting investment. 'What we have got to figure out is does our regulatory environment, our systems and so on allow us to maximise inward investments when we are competing globally and against other emerging markets for the kind of investment that would pull most people out of poverty and into employment. 'And so, when you write regulations and policies, that has got to be the overarching objective ... when we look out there at global systems and global governance and so on, a couple of things we are going to have to accept is that people aren't out to get us and South Africa needs to come to terms with that. Global best practice exists for a reason.' The deputy minister's remarks come after finance minister Enoch Godongwana tabled a budget for the third time in the space of three months. While the National Treasury had to scale back additions to spending areas in this year's budget, it managed to keep economic development spending at R289.8bn and R1-trillion for infrastructure in the medium term. Over the medium term, R1.03-trillion will be allocated to public infrastructure, with major allocations to roads at R402bn, energy at R219.2bn, and water and sanitation at R156.3bn. The main budget adds R33.7bn for infrastructure projects over the medium term. Sarupen said South Africa remained open for business and was working 'very much down the path of reform and with a determination to unlock, in that pipeline, tremendous amounts of growth'. 'I think it's an interesting journey that we're going to be on as a country. We know that the state balance sheet cannot provide what we've got to turn to the private sector. The other problem with the scale of debt ... is because we borrow so much, we are also kind of crowding out private capital for the kind of infrastructure investment we need as well.' He said South Africa had to do all it could on a policy and efficiency level to draw investment that would bring much-needed growth to the economy. UK trade commissioner for Africa John Humphrey said the estimated $100bn a year gap faced in infrastructure funding on the African continent had a real impact on African economies and African lives and no government alone can close the gap. 'All governments now, I don't just mean South Africa, I think all governments are feeling the pinch, particularly since Covid-19 and there are huge increases in levels debt, particularly in countries like the UK where there is a smaller tax base than we might have had previously against an ageing population. Here, in Africa, the problem is sort of the other way about where you've got a large demographic but to be able to expand the economy ... a lot of people are in the informal economy.' He said the government would have to create a 'fiscal line' that makes it approachable by the private sector. This would require African economies to have 'well-run economies where people have confidence that they will not have to worry about interest rates and inflation'. Gauteng Government Development Agency CEO Saki Zimxaka said South Africa needed levels of investment as a percentage of GDP to consistently stay above 25%, though they were now at about 15%. 'There is a biochemical factory that is going to be put up in Heidelberg, but for that to happen, they needed R70m invested in bulk infrastructure. Now, if you don't put bulk infrastructure in place because the public sector does not have money, it means that project is not going to happen.' He said the sequencing of budgets will be critical going forward as investments tend to get delayed in instances where the government does not deliver on the infrastructure needed to facility a smooth investment.
eNCA
26-05-2025
- Business
- eNCA
Sustainable Infrastructure Development Symposium kicks off in Cape Town
CAPE TOWN - The Sustainable Infrastructure Development Symposium is kicking off in Cape Town. Now in its fourth year, the conference brings together key stakeholders, experts, and decision-makers in infrastructure development. It comes as government is reaffirming its commitment to turning South Africa into a hub of construction activity - aimed at driving economic recovery, creating jobs, and improving service delivery. In his recent Budget Speech, Finance Minister Enoch Godongwana announced that government will invest around R1-trillion in infrastructure development over the medium term.
TimesLIVE
21-05-2025
- Business
- TimesLIVE
Sceptism from opposition but the budget gets a nod from GNU partners
Finance minister Enoch Godongwana received a nod from the GNU partners but sceptism from opposition benches when he presented his third-time-lucky budget speech. With a visibly relaxed and confident demeanour, Godongwana presented a budget wrapped in comic anecdotes — with nodding and clapping from the DA benches indicating success for the minister. The DA, as a GNU partner with whom the ANC shares 60% of the seats in the National Assembly, said it 'cautiously welcomes the revenue and expenditure proposals'. The DA rejected the previous budget's proposal to increase VAT and challenged it in the courts. However, the decision to drop the VAT increase carved a pathway to gaining the DA's support, a move which the party believes is 'manifestation of coalition politics in action'. The DA's spokesperson on finance, Mark Burke, described the budget as a workable outcome in the context of trying economic times. 'The DA was not prepared to get behind a budget that maintained unsustainable government expenditure on the back of raising VAT, making struggling South Africans pay for inefficiencies and waste in government — but today's version from minister Godongwana has gone some way to undo this. 'It is a victory for all South Africans that the mooted VAT hike has now finally been removed from the minister's revenue proposals, after the DA court action in this regard. We see this budget speech as a turning of the tide toward growth and investment. It is turning away from unchecked government spending funded by South African taxpayers.' The party welcomed the R1-trillion investment in infrastructure over the next three years, the snub on bailouts to state-owned entities, a national spending review which must eliminate all wasteful spending, and ending low-priority projects. 'The DA realises our economy desperately needs to grow and government must budget for this, creating the environment that enables this growth in the private sector. We also note that more realistic economic growth forecasts have been used to model revenue in this version of the budget.' Despite Godongwana's U-turn on the proposed VAT hike, the EFF, which was vocal and opposed to the proposed VAT hike in the previous tabling of the budget, rejected Wednesday's presentation. Calling it weak, misguided and disconnected from the lived reality of South Africans, the EFF says the absence of President Cyril Ramaphosa and his deputy Paul Mashatile is a further indicator of how disconnected the executive is from the economic realities facing the poor and the working class. 'We note the deliberate silencing of public discourse around this budget, with mainstream media choosing to focus obsessively on political coalitions and cabinet appointments, while ignoring one of the most consequential events in South Africa's governance calendar. This is not accidental — it forms part of a broader campaign to depoliticise the budget and shield the National Treasury from democratic scrutiny and public accountability.' Party spokesperson Sinawo Tambo criticised Godongwana for reportedly ignoring proposals from stakeholders and the majority of parties in parliament who claimed that the scrapping of the VAT hike was a product of consultation. 'Not a single alternative revenue-generation mechanism proposed by any political party is present in this third budget, proving once again that the VAT increases were scrapped solely due to the court intervention which was initiated by the EFF. The VAT increases have simply been substituted with austerity.' Action SA, which played a crucial role in helping the ANC pass its first fiscal framework in the budgeting process, said it was in two minds over Godongwana's proposed expenditure and revenue plans. Herman Mashaba's party welcomed the additional R7.5bn allocated to Sars over the medium term, a move the party had long insisted on. However, they disagreed with the suite of taxes and levies in the absence of what they described to be meaningful action to curb government wastage. In a statement, the party said while South Africans are still being forced to carry the burden of an extra R22bn through income tax bracket creep, an increase in the fuel levy, and duty hikes, the funding boost to Sars marks a critical step in the right direction. 'In his speech today, the finance minister confirmed that Sars' performance will be monitored monthly, with the potential for R20bn in tax relief to be granted in the 2026 budget if revenue collection exceeds targets. ActionSA is confident Sars will deliver on this promise, helping to ease the financial pressure on struggling South Africans.' Rise Mzansi said it was content that the budget baseline remained the same, however they would have wanted additional allocations to things that matter to South Africans — such as health, safety, education and economic infrastructure. The party believes the country will get out of its financial rut only by making smart, yet tough, decisions. 'Over the past few months, the people of South Africa have made it clear that they do not want to give the government any more money, and that with the existing money, elected representatives must make the country work. This is a fair demand, which has placed us in the difficult position we are now in, notwithstanding an almost 15-year period of poor policy decisions and wanton corruption. 'This is particularly about arresting corruption, how we spend money, and what we spend that money on. Especially, when we are told that the GDP growth outlook has been revised down from 1.9% to 1.4% for 2025, with projections also revised downwards over the medium-term. The consequence of this is also muted revenue collection.' Party leader and Scopa chair Songezo Zibi said it is important to ensure that the debt-servicing costs and interest which costs the fiscus about R1.2bn a day, must not be placed at the feet of future generations as a burden. 'Any further borrowing must be about igniting economic growth and a jobs boom. Borrowing to plaster over poor decisions is something Rise Mzansi will fight against. In this context, it is of the utmost importance that we focus on making the right policy choices that may not bear fruit today but are for the future, which means investing in skills and education that will contribute to the building of a modern and resilient economy. 'Furthermore, we must aggressively invest in infrastructure and health. We must invest in the things we need, not the things we want.' Zibi vowed to use his position at Scopa to advance accountability, ensuring that every rand is spent properly and accounted for, and that savings are cemented. 'We will work with the National Treasury to claw back on wasted and recklessly spent public funds. The next few years will tough, particularly for poor, working-class and middle-class South Africans, but with mature leadership, which often means making politically unpopular decisions, we will be able to get out of this mess, and truly build a prosperous South Africa.'
Daily Maverick
21-05-2025
- Business
- Daily Maverick
Enoch Godongwana's budget: a delicate balance of debt control and social investment unveiled
The bottom line is that a scalpel has been deftly wielded instead of a chainsaw, but economists and the markets will welcome the Treasury's commitment to spending within its limited means. With a scalpel in one hand and undisclosed tax measures for 2026 concealed by a glove in the other, Finance Minister Enoch Godongwana delivered a Budget on Wednesday that aimed to fill the revenue hole dug by the burying of the proposed VAT hikes while keeping mounting state debt levels under control. But the minister insisted that containing debt did not translate into the pain of austerity. 'This is not an austerity Budget,' the minister said in his prepared remarks. 'It is also a redistributive budget. It directs 61 cents of every rand of consolidated, non-interest expenditure towards the social wage… This budget invests over R1-trillion in critical infrastructure to lift economic growth prospects and improve access to basic services.' Pointedly, he noted that '… this is done without compromising the fiscal strategy of sustainable public finances'. The long-stated aim of stabilising debt in 2025/26 at a peak level as measured as a percentage of gross domestic product (GDP) remains firmly in place, with the ratio now seen at 77.4% of GDP this fiscal year compared to 76.2% in March. This will be its highest level since the dawn of democracy in 1994. 'We have achieved this difficult balance by reducing additional spending over the medium term by R68-billion… the size of the proposed increases to allocations is reduced, in line with what we can afford.' These 'downward revisions' to additional spending that were proposed in March over the next three years, an inflation-linked fuel levy adjustment, and undisclosed tax proposals for 2026 to boost state coffers by R20-billion — which are clearly in the drafting phase — were the key measures outlined to bridge the gap created by the scrapping of the VAT boost. The Treasury insists there are no spending cuts, but 'downward revisions' to additional spending amount to the same thing when compared with what was outlined in March. If it walks like a duck and quacks like a duck, it ain't no chicken. Painful Investment The bottom line is that a scalpel has been deftly wielded instead of a chainsaw, but economists and the markets will welcome the Treasury's commitment to spending within its limited means. Godongwana was diplomatic and gracious over the VAT fracas that ultimately produced this third try at a Budget. 'The debate and negotiations have deepened our understanding of policy trade-offs and institutional processes, while giving citizens unprecedented visibility into our democracy's evolution,' he said. 'Negotiation, debate and compromise, as we have seen unfold over the last weeks, has been a necessary, if sometimes painful, investment in the productivity of future government reform in the new political environment.' There will be a slight increase in the gross borrowing requirement to R588.2-billion from the R582-billion foreseen in Budget 2.0. That will include payments to Eskom of R80.2-billion, R30-billion less than the 2024 Budget estimate. The Budget deficit for this fiscal year is now seen amounting to 4.8% of GDP and is projected to narrow to 3.4% by 2027/28. 'Compared to the March estimates, tax revenue projections have been revised down by R61.9-billion over the three years. This reflects the reversal of VAT increase and the much weaker economic outlook,' the minister said. The Treasury has slashed its forecast for South African economic growth in 2025 to 1.4% from 1.9% in March, a reflection of ongoing domestic challenges and a worsening global outlook in the face of US President Donald Trump's chaotic tariff policies and trade wars. The mysterious R20-billion tax measure The tax measures to raise an additional R20-billion next year remain under wraps. Although an additional R20-billion is set down in the Budget documents for collection in 2026, Chris Axelson, acting head of tax at the National Treasury, was somewhat coy when questioned by journalists during the Budget lockdown. 'We aren't going into specifics on that right now. There are a variety of options, including options put forward by the public.' It's clear that the measures will not include any VAT revisions after the recent hullabaloo that almost tore asunder the Government of National Unity (GNU). In his speech, the minister said that in total an additional R7.5-billion that had been allocated to the South African Revenue Service (SARS) over the next three years, and that any resulting windfall from improved revenue collection would mean the mystery tax measures would not need to be implemented. 'As SARS utilises this investment to raise additional revenue, which I believe can be at least R35-billion, the R20-billion to close the current revenue gap will not have to be raised through taxes,' Godongwana said. He said SARS was also aiming to '… target illicit trade in tobacco and other areas, which should boost revenue over the medium term'. All in all, it seems that a viable Budget has been pulled out of Godongwana's fedora against a fraught and fraying political and economic backdrop. In baseball, after three strikes you are out, and the minister's bat on the third try has hit the ball. In cricket terms it may not be a six, but a boundary beckons. DM
