Budget Speech 2024

As such, our fiscal strategy supports economic growth and reduces risks to the economy while ensuring fiscal sustainability.

Compared to a year ago, the budget deficit for 2023/24 is estimated to worsen from 4 per cent to 4.9 per cent of GDP.

The higher budget deficit means that debt-service costs in 2023/24 have been revised higher, by R15.7 billion to R356 billion.

Debt-service costs will absorb more than 20 per cent of revenue. To put this into perspective, spending on debt-service costs is greater than the respective budgets of social protection, health, or peace and security.

For this reason, Honourable Members, we are strengthening our strategy and sticking to our fiscal goals.

A net reduction of R80.6 billion in non-interest expenditure is being implemented over the medium-term. At the same time, revenue has been revised up by R45.6 billion over the medium-term, relative to 2023 MTBPS. And, we have taken the decision to introduce a reform of the Gold and Foreign Exchange Contingency Reserve Account, also known as GFECRA.

Taken together, even with the spending increases I will announce later, the national government gross borrowing requirement will decline, from R457.7 billion in 2024/25 to R428.5 billion in 2026/27.

The deficit will begin to improve from 2024/25, to an estimated 4.5 per cent of GDP, reaching 3.3 per cent by 2026/27.

Debt will now peak at 75.3 per cent of GDP in 2025/26.

All of this puts us in a position to continue to protect core services. It allows 60 per cent of non-interest spending to be directed to the social wage. It also allows us to preserve capital spending.

Compared to the MTBPS, we are adding R57.6 billion to pay for the salaries of teachers, nurses and doctors, among many other critical services.

Madam Speaker, as I mentioned earlier, in this budget we are announcing a reform of GFECRA. GFECRA is an account held at the Reserve Bank that captures gains and losses on the country's foreign currency reserve transactions.

Simply put: if the Rand strengthens against the US Dollar and other reserve currencies, the account balance declines, and vice versa. The account balance has grown to over R500 billion over the years because the Rand has depreciated over time.

A new settlement arrangement is being introduced that will reduce government borrowing and improve the Reserve Bank's equity position.

Ultimately, we are bringing South Africa closer to our peers and ensuring alignment to international best practice. We will draw down R150 billion of the GFECRA balance once we have ensured that sufficient buffers are available to absorb exchange rate swings and the solvency of the Reserve Bank is not compromised.