Cape Town - Dangling a new cash windfall from unexpected tax collections, Finance Minister Enoch Godongwana announced an extension of the R350 Social Relief of Distress grant, partial takeover of Eskom’s debt, and bailouts for three state-owned companies.
Furthermore, SAPS will get 15000 constables to help combat crime as it threatens to bring the economy to its knees.
Delivering his mini-budget on Wednesday, Finance Minister Enoch Godongwana said the aim of the 2022 Medium-Term Budget Policy Statement was to secure the country’s “future, stability and prosperity”.
The policy statement comes amid expectations that he would significantly cull troubled power utility Eskom’s overbearing R400 billion debt, but Godongwana omitted the finer details.
Freeing Eskom partially from its R400 billion debt would allow it to implement its unbundling process and avail money for investment into critical electricity supply and transmission infrastructure, Godongwana said.
But the minister skirted around the exact figure and timelines when discussing Eskom’s debt, whose unreliable power supply is one in a litany of structural factors impeding the economy’s growth.
He listed other structural impediments as costly and inefficient ports and rail network, crime and corruption, weak state capacity, over-saturation in markets and barriers to entry that suppress growth and small businesses.
Godongwana said these undermine government efforts to eradicate unemployment and contribute to inequality.
On Eskom, he said: “While the selection of the relevant debt instruments and the method of effecting the relief is still to be determined, the quantum is expected to be between one-third and two-thirds of Eskom’s current debt.”
Once complete, the debt takeover and other reforms will see to it that Eskom is sustainable financially.
“The programme (debt takeover) will allow Eskom to focus on plant performance and capital investment and ensure that it no longer relies on government bailouts,” Godongwana said.
He said a Treasury-led independent review of Eskom’s generation fleet performance will inform the conditions of the debt transfer and the finer modalities will be announced in February.
Godongwana said the policy statement aimed to address the needs of South Africans and “secure our future stability and prosperity”. It seeks to “(restore) fiscal strength and rebuild fiscal space, despite the unfavourable economic backdrop”, increases the quality of education and health, prioritises the people’s safety and security, and invests in future growth by increasing funding for important infrastructure.
In relation to safety and security, he said the Treasury would provide resources to allow the SAPS to hire 15000 officers – which is a separate mass recruitment from the 10 000 that were announced for the current financial year.
The funding comes from revenue collection. The gross tax revenue collection for this financial year was revised up by R83.5m to R1.68 trillion.
It will also be used to reduce the deficit in the current financial year and over the Medium-Term Expenditure Framework, provide additions for infrastructure projects and education, health and policing, and deal with “fiscal risks” that were identified in the February budget.
Reversing course on bailouts, Godongwana said Transnet was allocated R2.9 billion for the return of out-of-commission locomotives, while Denel gets R3.4bn.
In relation to e-tolls, Godongwana proposed to settle Sanral’s R23.7bn billion debt. Gauteng would pay 30% of Sanral’s e-toll debt. An adjustment of R6.3bn would go towards disaster relief.
Other adjustments are:
- R389 million for 24 rural bridges;
- R500 million for the Home Affairs digitisation project, which will employ 10 000 young people for 3 years;
- R118 million for interim relocation costs and to prepare Parliament’s reconstruction.
Godongwana also tabled a raft of bills, including the 2022 Division of Revenue Amendment Bill, Adjustments Appropriation Bill, Special Appropriation Bill, Rates and Monetary Amounts and Amendment of Revenue Laws Bill, among others.
He revised the country’s GDP growth to 1.9% in 2022 compared to the February estimate of 2.1%.