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BUDGET IN A BOX

Debt, taxes and a Sarb lifeline: What you need to know about Budget 2024

Debt, taxes and a Sarb lifeline: What you need to know about Budget 2024
Funding cuts have affected all NPOs, with some receiving cuts to administration costs while others have reduced the number of beneficiaries they serve. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

Some of the highlights of Budget 2024 presented on Wednesday, 21 February, by Finance Minister Enoch Godongwana:

Sarb lifeline

Over the next three years, R150-billion will be drawn from the Gold and Foreign Exchange Contingency Reserve Account (GFECRA). The South African Reserve Bank (Sarb) holds these funds on behalf of the Treasury. The amount currently stands at just more than R500-billion. The necessary legislation, the GFECRA Defrayment Bill, was tabled on Wednesday, 21 February.

Debt/deficits

Compared to a year ago, the budget deficit for 2023/24 is estimated to worsen from 4% to 4.9% of gross domestic product (GDP). This is seen falling to 4.5% of GDP and to 3.3% by 2027, largely because of the GFECRA funds. The overall debt burden is now expected to peak at 75.3% of GDP in 2025/26, down from 77% previously.

Domestic economic growth projection

The estimate for economic growth in 2034 has been revised down to 0.6% from 0.8% previously. Between 2024 and 2026, growth is projected to average a sluggish 1.6% per year.

Read more in Daily Maverick: Government to squeeze an additional R15-billion revenue out of struggling consumers 

Spending

In 2024, debt interest payments amounting to R382.2-billion is the second largest expenditure item, after the R387.3-billion for social development. Basic Education is allocated R324.5-billion, and Health R271.9-billion for the 2024/25 financial year.

Revenue

At R1.73-trillion, tax revenue for 2023/24 is R56.1-billion lower than estimated in the 2023 Budget. The shortfall is largely due to the decline in corporate profits and revenue from taxes on mining.

Read more in Daily Maverick: Motoring sector finally gets 150% rebate on investment in new electric vehicles, but only in 2026

Taxes

This Budget contains tax measures to raise R15-billion in 2024/25 to alleviate immediate fiscal pressure and cut debt. This will be done by not adjusting the tax brackets, rebates and medical tax credit for inflation. 

For alcohol products’ excise duties, above-inflation increases of between 6.7 and 7.2% for 2024/25 are proposed. Taxes on tobacco products will also be hiked, raising the price of a pack of smokes by 97 cents. 

The carbon fuel levy will increase to 11 cents per litre for petrol, and 14 cents per litre for diesel, effective from 3 April 2024.

SOEs

There are no more lifelines being thrown at flailing SOEs. Only bailouts and government guarantees that were previously announced. 

Read more in Daily Maverick: No new money allocated to basket-case state-owned enterprises by Godongwana

Climate Change

The government has raised US$3.3-billion so far from Multilateral Development Banks and International Finance Institutions to support climate change, energy, and just transition objectives. DM

Gallery

Comments - Please in order to comment.

  • Johan Buys says:

    Summary : we are incurring debt to pay interest and salaries and that is after raiding the savings fund. This is not sustainable. It is overdue that public workforce takes no new hires. Let people retire / resign / die off but then don’t replace them. There is no chance we actually retrench comrades so let’s go for the second best option.

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