Minister of Finance Enoch Godongwana delivered the second Budget speech of his term on 22 February 2023. Setting out the government’s tax and spending plans for the year ahead. Minister Godongwana said his plans were focused on policies that support faster growth and address fiscal risks.

This was in response to a 2.5% growth in South Africa’s economy in 2022 and a deterioration in medium-term growth outlook with real GDP growth projected to average 1.4% from 2023 to 2025. The consolidated fiscal deficit is projected at 4.2% of GDP for 2022/23 and is expected to reduce to 3.2% in 2025/26.

The policies aimed at supporting faster growth and address fiscal risks would be “anchored” on three pillars. The pillars are ensuring a stable macroeconomic framework to create a conducive environment for savings, investment, and growth; implementing growth-enhancing reforms in the energy and transport sectors; and strengthening the capacity of the state to deliver quality public services, invest in infrastructure and fight crime and corruption.

If growth is anchored by these three pillars, the foundation of each pillar is a reliable electricity supply. It comes as no surprise then that Eskom’s failure to deliver reliable electricity supply was described as the biggest economic constraint.

Written by the Werksmans Tax & Exchange Control Team