Experts weigh in as South Africa prepares for critical budget speech 3.0

AS SOUTH Africa braces for Finance Minister Enoch Godongwana’s third budget speech on Wednesday, a wave of expert opinions reveals a landscape marked by both cautious optimism and pronounced concerns.

- YOGASHEN PILLAY

With rising economic pressures and a growing budget deficit, Godongwana faces the complex task of generating revenue without curbing growth.

Old Mutual chief economist Johann Els highlighted the anticipated revenue shortfall following the scrapping of a planned Value Added Tax (VAT) increase.

Els estimated a loss of around R13.5 billion for the current year, with an alarming three-year total that could reach approximately R75bn.

“This will have to be made up for; Treasury will have to revise their gross domestic product (GDP) growth forecast downwards; they have it at 1.9% for 2025, but most forecasts have GDP around 1.5%,” he said.

The ramifications of this budget speech extend beyond just lost tax revenue. Els said the budget speech was more than just a VAT increase that needed to be made up for.

“It is crucial that the government sticks to the deficit targets that they set in the first two budgets. Investors and rating agencies would not like it if the government tries to make up for the loss in revenue by borrowing more.