SA Budget 3.0: Godongwana to table new budget on 21 May
Finance Minister Enoch Godongwana confirmed in a media briefing in Pretoria on Wednesday (30 April) that SA’s new National Budget (version 3.0) will be tabled on 21 May.
This was his first direct interaction with the SA press since his U-turn on the Vat increase last Thursday and following the Western Cape High Court ruling on the matter on Sunday.
Godongwana – who says he won’t resign in the face of the fiasco that will see SA presented with a third iteration in four months – has been out of the country attending the G20 Finance Ministers meeting in the US capital, Washington, last week.
He faced tough questions around what comes next – how does SA balance the books, and where is government likely to cut to make up for the touted R75 billion budget shortfall over the next three years due to the Vat hike of 0.5 percentage points for both 2025 and 2026 being canned.
It was an unprecedented situation when the February budget was called off for the first time since democracy. Uncertainty continued even after Godongwana presented Budget 2.0 in March, with the ANC’s main partner in the government of national unity (GNU) – the DA – as well as several other parties saying they were against the Vat increase, albeit at a lower increase to the one envisaged by the minister and National Treasury in the ‘untabled’ February budget.
Now a third national budget – which is already being prepared by National Treasury amid tough further talks between GNU and other parties – needs to be ironed out, presented by Godongwana, and approved by parliament.
On new cuts, Godongwana has been clear in both National Treasury’s Vat hike withdrawal statement last week and in a responding affidavit to the DA and EFF Vat court case at the weekend that “the withdrawal creates a medium-term revenue shortfall of approximately R75 billion, necessitating decreased government expenditure with likely impacts on service delivery”.
Calls for SA’s bloated cabinet and the number of government departments to be slashed will likely fall on deaf ears, especially considering the additional cabinet posts to accommodate the GNU partners.
The public wage bill is also unlikely to face cuts.
Following the U-turn last week, the minister wrote to the Speaker of the National Assembly notifying her that he is withdrawing the Appropriation Bill and the Division of Revenue Bill in order to propose expenditure adjustments to cover the shortfall in revenue, National Treasury noted.
“The decision not to increase Vat means that the measures to cushion lower-income households against the potential negative impact of the rate increase now need to be withdrawn and other expenditure decisions revisited,” it added.
“To offset the unavoidable expenditure adjustments, any additional revenue collected by Sars [South African Revenue Service] may be considered for this purpose going forward.
“The Minister of Finance expects to introduce a revised version of the Appropriation Bill and Division of Revenue Bill within the next few weeks.”
National Treasury, however, pointed out that parliament “will be requested to adjust expenditure in a manner that ensures that the loss of revenue does not harm South Africa’s fiscal sustainability”.
While further details and possible scenarios may be presented by Godongwana at the media briefing in Pretoria on Wednesday, speculation is likely to continue on what areas of government expenditure are going to be cut.-MONEYWEB
This was his first direct interaction with the SA press since his U-turn on the Vat increase last Thursday and following the Western Cape High Court ruling on the matter on Sunday.
Godongwana – who says he won’t resign in the face of the fiasco that will see SA presented with a third iteration in four months – has been out of the country attending the G20 Finance Ministers meeting in the US capital, Washington, last week.
He faced tough questions around what comes next – how does SA balance the books, and where is government likely to cut to make up for the touted R75 billion budget shortfall over the next three years due to the Vat hike of 0.5 percentage points for both 2025 and 2026 being canned.
It was an unprecedented situation when the February budget was called off for the first time since democracy. Uncertainty continued even after Godongwana presented Budget 2.0 in March, with the ANC’s main partner in the government of national unity (GNU) – the DA – as well as several other parties saying they were against the Vat increase, albeit at a lower increase to the one envisaged by the minister and National Treasury in the ‘untabled’ February budget.
Now a third national budget – which is already being prepared by National Treasury amid tough further talks between GNU and other parties – needs to be ironed out, presented by Godongwana, and approved by parliament.
On new cuts, Godongwana has been clear in both National Treasury’s Vat hike withdrawal statement last week and in a responding affidavit to the DA and EFF Vat court case at the weekend that “the withdrawal creates a medium-term revenue shortfall of approximately R75 billion, necessitating decreased government expenditure with likely impacts on service delivery”.
Calls for SA’s bloated cabinet and the number of government departments to be slashed will likely fall on deaf ears, especially considering the additional cabinet posts to accommodate the GNU partners.
The public wage bill is also unlikely to face cuts.
Following the U-turn last week, the minister wrote to the Speaker of the National Assembly notifying her that he is withdrawing the Appropriation Bill and the Division of Revenue Bill in order to propose expenditure adjustments to cover the shortfall in revenue, National Treasury noted.
“The decision not to increase Vat means that the measures to cushion lower-income households against the potential negative impact of the rate increase now need to be withdrawn and other expenditure decisions revisited,” it added.
“To offset the unavoidable expenditure adjustments, any additional revenue collected by Sars [South African Revenue Service] may be considered for this purpose going forward.
“The Minister of Finance expects to introduce a revised version of the Appropriation Bill and Division of Revenue Bill within the next few weeks.”
National Treasury, however, pointed out that parliament “will be requested to adjust expenditure in a manner that ensures that the loss of revenue does not harm South Africa’s fiscal sustainability”.
While further details and possible scenarios may be presented by Godongwana at the media briefing in Pretoria on Wednesday, speculation is likely to continue on what areas of government expenditure are going to be cut.-MONEYWEB
