National Treasury has announced that South Africa’s Minister of Finance, Enoch Godongwana, will table the Medium Term Budget Policy Statement (MTBPS) in Parliament on 26 October 2022 at 2 pm.
The Medium Term Budget Policy Statement sets government policy goals and priorities, forecasts macroeconomic trajectory and projects the fiscal framework over the next three years by outlining spending and revenue estimates, among others.
Godongwana faces a tough task, as a global recession looms, coupled with South Africa’s massive energy crisis, escalating inflation, fluctuating fuel prices and the country’s high unemployment rate.
The Organisation for Economic Co-operation and Development (OECD) said that Treasury should raise taxes, including Value-Added Tax (VAT), in order to reduce the government Budget deficit, finance infrastructure investments and the growing social security spending.
This came after the OECD completed its 2022 Economic Survey of South Africa.
The OECD survey found that South Africa enacted impactful policy measures and concrete recovery strategies in response to the Covid-19 pandemic.
However, it noted that economic challenges and social disparities still remained.
OECD acting chief economist Alvaro Santos Pereira said boosting job creation and strengthening the redistributive role of the tax and benefit system were key priorities for South Africa.
Pereira said South Africa would need to create more fiscal space to deal with potential future shocks and address spending needs in health, infrastructure, and education.
“In the medium- to long-term, tax revenue mobilisation will be critical. Lifting tax revenues will be necessary to restore the sustainability of public finances and to finance growth-enhancing reforms,” Pereira said.
Godongwana has previously warned that making the R350-a-month SRD grant permanent would be unaffordable and unsustainable in the long run.
Responding to the OECD report, deputy finance minister David Masondo said trade-offs were becoming increasingly necessary in the current economic climate.
Masondo said the Treasury was taking cognisance of recommendations made to enhance growth and productivity while addressing the country’s developmental challenges.
“Our progress in tackling unemployment, poverty and inequality remains insufficient. The roots of our growth challenges are well understood,” Masondo said.
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