Godongwana failed to address issues threatening economy

Finance Minister Enoch Godongwana has failed to address issues threatening the country’s economy during his budget speech on Thursday. Picture: Phando Jikelo/African News Agency (ANA)

Finance Minister Enoch Godongwana has failed to address issues threatening the country’s economy during his budget speech on Thursday. Picture: Phando Jikelo/African News Agency (ANA)

Published Feb 25, 2024


LAST week’s budget speech has been criticised, with political parties and union federations, believing that Finance Minister Enoch Godongwana failed to address issues threatening the economy.

Many said the government had prioritised the interests of capitalists over its people, after Godongwana on Thursday announced measures in this year’s budget to raise R15 billion in 2024/2025 to alleviate immediate fiscal pressure, and support faster debt stabilisation.

Godongwana further announced above-inflation tax increases on alcohol products, between 6.7 and 7.2% for the year 2024/25.

He said the government also proposed to increase tobacco exercise duties by 4.7% for cigarettes and tobacco. He said tobacco pipe and cigars would surge by 8.2%.

Godongwana added an increase in excise duty on electronic nicotine and non-nicotine delivery systems - known as vapes, to R3.04 per millilitre.

He said the carbon fuel levy would increase to 11 cents per litre for petrol and 14 cents per litre for diesel, effective from April 3, 2024.

Although his speech highlighted investments in critical sectors such as education, healthcare, public transport and infrastructure, he neglected the challenges faced by many communities such as the water crisis, and the spatial challenges that continues to marginalise the poor.

Also, Godongwana did not say anything about the repo rate, which increased by 475 basis points since November 2021. This resulted in many people losing their properties and livelihoods, while others suffered depression.

In response to the speech, the EFF said the proposed budget had undisputedly and scientifically proven that the National Treasury’s conduct, policies and approach to the fiscus were threats against economic security, and should be treated with serious suspicion.

The party said this was because the government continued to advance the interests of the capitalist establishment at the expense of the lives of “our people”.

The EFF said the proposed budget failed to adequately address the issue of electricity blackouts, load shedding, and the state of Eskom, which threaten the country’s economy.

“This budget is yet another confirmation that the ANC government lacks the willingness and capacity to resolve the energy security crisis facing South Africa. Instead, the ANC, against all warnings and historical data, erroneously entrusted the task of resolving the energy crisis to the National Treasury.

“The National Treasury has outsourced solution findings to Europeans whose interests will further entrench the neo-colonialism of South Africa. The so-called report on the independent review of Eskom’s coal-fired power stations by an international consortium led by VGBE Energy is neither independent nor a genuine attempt at depoliticising the decision to decommission coal-powered stations. The project to try and stop South Africa from using coal, driven by greed, must be rejected,” said the EFF.

The African Transformation Movement (ATM) said while it welcomed the fiscal strategy outlined by Godongwana, aimed at supporting economic growth and reducing debt, it was concerned about the limited emphasis on economic transformation and job creation.

The party said that a more concerted effort toward economic empowerment and inclusive growth was necessary to address the entrenched inequalities in the country.

“Furthermore, while the proposed tax measures aim to generate additional revenue, the ATM cautions against measures that may disproportionately impact low-income households.

“The Minister’s budget speech paints a bleak and desolate picture of South Africa's economic landscape, characterised by systemic failures, broken promises, and unfulfilled aspirations. The ATM warns of a future marred by despair and uncertainty unless urgent action is taken to address the root causes of inequality, poverty, and economic instability. Only through a concerted effort towards genuine transformation, social justice, and equitable development can South Africa hope to overcome the formidable challenges that lie ahead,” the party said.

The South African Federation of Trade Unions (SAFTU) said it was disappointed that Godongwana continued to obey the International Monetary Fund’s (IMF) instructions dating to mid-2020, by amplifying fiscal consolidation and therefore cutting the inflation-adjusted budgets of nearly every part of the state.

“While raising the budget for subsidising corporations via the economic affairs cluster, he is cutting basic education, health, social development, correctional services and support for the state-owned enterprises (SOEs) that serve poor and working people.”

The federation said the treasury was not the main reason for what was widely understood as state failure.

“Despite staring at a possible defeat, the ANC government simply refuses to accept that their Structural Adjustment Programmes encapsulated in structural reforms, have dismally failed the economy and has deepened the marginalisation of the poor majority.”

The Federation of Unions of South Africa (Fedusa) cautioned against the possible stealing and wasting of the R150bn of the Gold and Foreign Exchange Contingency Reserve Account that would be withdrawn to reduce government borrowing.

Meanwhile, the ANC said it was pleased to support the budget presented by Godongwana as a significant step towards protecting the achievements of the past 30 years of democracy, and working towards a better life for all citizens.

“This budget effectively addresses the pressing needs of the nation, as outlined in our January 8 statement. These needs include rebuilding the economy to create more jobs and stimulate growth, enhancing basic services and infrastructure, tackling gender-based violence and promoting family values, resolving the energy crisis and ending load shedding, and intensifying efforts against crime and corruption,” said the ANC.

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