Finance Minister Enoch Godongwana has told the National Assembly in his Medium Term Budget Policy Statement that government expects economic growth of 1.9% in 2022 down from the earlier estimate of 2.1%.
Godongwana was speaking at the Cape Town City Hall. He says economic growth is expected to hover at around one point six percent over the next three years.
The Finance Minister has acknowledged that faster growth is required to create employment and reduce inequality.
Finance Minister Enoch Godongwana’s 2022 Medium-Term Budget Policy Statement:
Godongwana says South Africa is restoring the health of its public finances due to disciplined budgeting, supported by high commodity prices and a narrowing budget deficit.
He says budget cuts will no longer be necessary as the country’s budget deficit is expected to narrow from 4.9% of GDP in the current year to 4.1% next year.
According to the National Treasury’s Medium Term Budget Policy Statement tabled by Godongwana, the government has once again collected more revenues than its February budget estimates.
It shows that the government collected R85-billion more in revenue. The windfall will be used to lower debt and increase spending on health, education, and local government-free basic services among other priorities.
But, it has flagged risks that unreliable power supply and higher-than-expected public wage bills pose significant risks to fiscal sustainability.
Government has conceded that the intensity of load shedding is having a disastrous effect on the country’s economy and will focus its efforts and speed up reforms in the electricity sector.
The Finance Minister says there are also implementing several policies and regulatory changes aimed at creating a competitive energy market.
“These include the removal of the licensing threshold for embedded generation projects, where the pipeline has grown to 100 projects, representing over 9 000 MW of capacity. The Electricity Regulation Amendment Bill has been finalised. It provides for the establishment of an independent transmission and system operator, which will fundamentally transform the electricity sector. Reducing South Africa’s reliance on a single monopoly utility and unlocking massive new private investment in generation capacity will contribute significantly to long-term energy security.”