RATE IT | Four key announcements from Godongwana's midterm budget speech

Finance minister Enoch Godongwana delivered his midterm budget speech on Wednesday. 

The budget touched on many topics that were raised leading up to the speech, including the government taking over embattled power utility Eskom’s debt and scrapping e-tolls. 

It also included an extension of the R350 Covid-19 social relief of distress (SRD) grant for another year. 

Here are four key announcements from Godongwana's budget speech. What do you think of them?

Eskom’s debt

The finance minister said the government will be taking on “a significant portion” of Eskom’s R400bn debt to ensure the power utility's long-term financial viability.

While the exact figure is not yet known, he said it will be between one- to two-thirds of its current debt. 

“For at least a decade, we have spent billions of rand supporting Eskom, with limited improvements in the reliability of the electricity supply or the financial health of the company. 

“The debt takeover, once finalised, together with other reforms, will ensure that Eskom is financially sustainable. The programme will allow Eskom to focus on plant performance and capital investment and ensure that it no longer relies on government bailouts,” he said.

Scrapping of e-tolls

Godongwana said the debate on e-tolling on a national level must end,

He said the uncertainty surrounding the Gauteng Freeway Improvement Project continues to have a major negative implication for road construction in the country.

“We need to move on from the debates of previous years and find solutions to this challenge,” he said.

“To resolve the funding impasse, the Gauteng provincial government has agreed to contribute 30% to settling Sanral’s debt and interest obligations, while national government covers 70%.”

Godongwana said the province will also cover the costs of maintaining the 201km and associated interchanges of the roads and any additional investment in road will be funded through either the existing electronic toll infrastructure or new toll plazas, or any other revenue source within their area of responsibility.

The government has proposed an initial allocation of R23.7bn from the national fiscus, which will be disbursed on strict conditions.

Grant extension

He said the R350 SRD grant will be extended by another year until March 31 2024.

The SRD grant was introduced in May 2020 as a temporary measure to respond to the needs of the most vulnerable who were affected by lockdown measures. It has been extended several times since then.

“Discussions on the future of the grant are ongoing and involve very difficult trade-offs and financing decisions. 

“Despite the provision made in this budget, I want to reiterate that any permanent extension or replacement will require permanent increases in revenue, reductions in spending elsewhere, or a combination of the two,” said Godongwana.

Wage bill

Godongwana said government wages will be increased but below the 10% hike unions demanded.

On August 30, the government made a final offer to workers, including:

• Continuation of a non-pensionable cash allowance for the current financial year. This translates to an average of R1,000 per employee per month until March 2023.
• A pensionable salary increase of 3% for public servants.

The minister said the offer is in the best interest of the fiscus and public service workers. 

“Implementing it does not undermine the collective bargaining process. We believe that the facilitation process has helped all parties get to this point. Therefore, the spending estimates we are tabling today include this amount. This offer will be implemented through the payroll system, and back dated to April.”

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