SA can’t rely on revenue windfalls in the long run, reforms must kick in soon - Godongwana
JOHANNESBURG - Finance Minister Enoch Godongwana said structural reforms must kick in soon as the fiscus could not rely on better-than-expected revenue collections windfalls from developments like the commodity cycle for much longer.
Godongwana was addressing a virtual panel discussion after the Wednesday Medium-term Budget Policy Statement (MTBPS). The panel discussion was organised by Daily Maverick.
The medium-term budget used some of the higher-than-expected tax income to reduce government borrowing. National Treasury expects that by the end of 2023/24, government revenue will exceed its spending aside from interest payments for the first time in 15 years.
The budget also included R5.8 billion to Transnet for infrastructure repairs and freight rail locomotives maintenance, support for Eskom’s R400 billion debt, R23.7 billion for Sanral, and
R3.4 billion for Denel.
Journalist and webinar moderator Ray Mahlaka asked Godongwana if Treasury was counting on the commodities cycle to continue contributing to high revenues. Godongwana said in the current fraught economic environment of the world, nothing was guaranteed.
“It’s an interesting question because if you look at what we are saying in the MTBPS, revenue has largely been broad-based in the sense that it’s not only mining. We talk about the finance sector and manufacturing growth.
“We are not making an assumption that that revenue growth will be with us for long and it is going to decline. If we are going to make that assumption, we have to say how we position expenditure and spend revenue such that we still maintain our path of fiscal prudence,” said Godongwana.
Godongwana said the performance of the manufacturing sector surprised many from a revenue perspective, but that the National Treasury was still operating from the assumption that this was temporary. He said if there was a gloomy global economic outlook, it will affect South Africa.
“If Eskom, for instance, were to improve plant performance... that would change the game because then we will have, to some extent, some reliable electricity supply,” Godongwana said.–