Freedom Front Plus
Freedom Front Plus

Budget 2023: Opportunity to stimulate economy missed due to misguided priorities

The Budget announced by the Minister of Finance, Enoch Godongwana, today missed a golden opportunity to stimulate economic growth because of its misguided priorities.

These priorities include throwing yet another R1 billion down the bottomless SAA-pit, while the lifeline to the Post Office amounts to R2,4 billion.

All while just one rand more in aid to failed public enterprises almost comes down to high treason given the country's critical financial position.

This squandering of funds on the SAA, the Post Office and other public enterprises must be viewed against the backdrop of the country's highest unemployment rate in recent history, government’s wage bill and debt growing at an alarming pace, and the public and business sector fighting a losing battle against the power crisis.

The money should rather have been spent on more important priorities, like greater incentives to the public for converting to solar power, but after nearly three decades of ANC rule these priorities have become totally skewed.

The Minister did announce that from now on, South Africans will be able to deduct 25% of the cost of solar panels from their tax.

The FF Plus had hoped for a much higher tax incentive to truly encourage South Africans to invest in alternative power generation, rather than government squandering billions on public enterprises.

A lifeline must inevitably be extended to Eskom.

At present, Eskom's debt burden amounts to approximately R400 billion. Government is wholly to blame for allowing the utility's debt to get so out of hand, and the company to collapse under corruption and incompetence largely brought about by Black Economic Empowerment (BEE).

As per the FF Plus's request, personal and company taxes were not increased. The so-called sin tax was, however, as expected, adjusted with inflation.

Expenditure and government debt are out of control, and the unavoidable taking on of Eskom's debt amounting to R400 billion will further weaken the fiscal position.

The state of the crippled public enterprises is indicative of government's own financial situation. In a nutshell, this is how it currently stands:

• The budget deficit shot up to R284 billion.
• Government expenditure increased to R2,24 trillion.
• Government's debt grew to R5 trillion, or 75% of the GDP.
• The financing costs of the debt rose to R340 billion, or 5% of GDP.
• And R701 billion was earmarked for salaries.

There exists a very real danger that the country's expenses were either underestimated or projected to be lower to make the situation appear better.

That could lead to serious shortfalls, particularly regarding the wage bill, while there are no viable plans to reduce it.

Government's wage bill is one of the highest among the world's developing countries.

Expressed as a percentage of GDP (31% in 2022), it is higher than the average of the 38 member countries of the Organization for Economic Cooperation and Development (OECD).



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