WATCH | ‘This is not an election budget’: Enoch Godongwana defends fiscal moves

22 February 2024 - 12:44
By Khulekani Magubane
Finance Minister Enoch Godongwana during the  2024 National Budget Speech at the Cape Town City Hall on February 21 2024.
Image: Brenton Geach/Gallo Images Finance Minister Enoch Godongwana during the 2024 National Budget Speech at the Cape Town City Hall on February 21 2024.

Finance minister Enoch Godongwana has dismissed suggestions his 2024 budget tabled in parliament on Wednesday smacks of political expediency ahead of South Africa’s general election this year.

Speaking at a National Treasury breakfast at Rand Merchant Bank's (RMB) Portside in Cape Town, Godongwana was asked why the government consistently fell into the temptation of spending more in an election year. He said the budget makes appropriate interventions on the budget deficit as well as debt-to-GDP.

“I have made it clear that this is not an election budget. If any budget, the 2023-24 budget was going to be the election budget — if any. My sense is that you would have to start implementing a year out, so that you ensure that you have covered yourself,” he said.

South Africa will hold its seventh national election on May 29, which is expected to be a watershed moment in the country's political history, where the ANC’s expected slide in support may put coalition politics on the table at a national level for the first time.

A key feature of the 2024 budget was an announcement that the Treasury would draw down on R150bn from the Gold and Foreign Exchange Currency Reserve Account (GFECRA) managed by the South African Reserve Bank to cover debt service costs.

Asked where the Treasury stood on pressure to introduce a permanent basic income grant, the minister said the budget was tasked with using sound economics to “grow the cake” of financial resources that politics sought to distribute.

“There are a number of issues. From a Treasury perspective, we must distinguish between fantasy and reality. The reality is there is an NGO movement that is campaigning for a basic income grant. And that is appealing to a number of parties and politicians and that is where the difficulty is.”

If a government sought to appease voters ahead of an election using a budget, he said, it would be more sensible to use the budget for the year before elections, to cover any deference from that budget’s fiscal assumptions and absorb domestic as well as global shocks.

Asked how he would rate his own budget on a scale of 1 to 10, the minister gave his 2024 budget an 8 out of 10.

RMB chief economist and head of research Isaah Mhlanga said the 2024 budget showed that the Treasury was doing the right thing, remarking that other politicians would have given themselves 10 out of 10.

He initially gave the budget 7 out of 10, but later added one more point, “not because Treasury failed, but because on constraints in realms outside Treasury’s purview”.

Business Times