Budget Speech 2023

Madam Speaker, in these conditions, government must maintain a prudent fiscal stance.

The fiscal consolidation strategy we adopted several years ago has (1) restrained growth mainly in consumption expenditure, and (2) allowed us to use part of higher-than-expected revenues to reduce the deficit.

As a result, we are bringing the fiscal deficit down without resorting to tax increases or further cuts in the social wage and infrastructure.

A primary fiscal surplus will be achieved in the current financial year, and this will be maintained over the medium term. This is a critical policy stance.

In addition, we must consider the consolidated position, which includes debt-service costs.

In this regard, the consolidated fiscal deficit is projected at 4.2 per cent of GDP for 2022/23, and this will reach 3.2 per cent in 2025/26.

These figures include the impact of the partial take-over of Eskom debt, which I will elaborate on later.

Mainly due to this Eskom debt relief, government debt will stabilise at a higher level of 73.6 per cent of GDP and in 2025/26. This is three years later than anticipated in the 2022 Medium Term Budget Policy Statement.

In general, government debt is high. The gross debt stock is projected to increase from R4.73 trillion in 2022/23 to R5.84 trillion in 2025/26. And because debt is high, our debt-service costs are also high.

Debt-service costs are projected to average R366.8 billion annually over the medium term, reaching R397.1 billion in 2025/26. These are resources that could otherwise be used to address pressing social needs or to invest in our future.

There are risks to the fiscal outlook. These include a worsening of the economic outlook, a further weakening of the finances of state-owned companies, and an unaffordable public-service wage agreement.

If these risks materialise, they will require us to make difficult budgeting trade-offs.

For these reasons, we must continue exercising fiscal restraint.

Accordingly, government non-interest spending will be kept below the level of revenue into the future, and we will continue targeting the stabilisation of debt.