National Budget Speech: A view from our experts

The much-awaited National Budget Speech was delivered earlier today. With ESG embedded in our offerings, we are determined to be a part of the solutions to some of the issues affecting our economy, with the goal of working towards a better South Africa for everyone.

Here are the key points covered by Finance Minister Enoch Godongwana:

• Energy crisis: With the lack of reliable electricity supply being the biggest economic constraint, government is acting decisively to bring additional capacity onto the grid. Secondly, R337 billion of Eskom’s debt is already government guaranteed. Explicitly taking on some of this debt will reduce fiscal risk and enhance long term fiscal sustainability.
• Unemployment: Eradicating poverty, inequality and unemployment is urgent, and a growing economy is key to achieving this objective. Implementing growth-enhancing reforms is a crucial element of the country’s growth strategy.
• Economic growth: Mainly due to Eskom’s debt relief, government debt will stabilise at a higher level of 73.6 % of GDP in 2025/26. This is three years later than anticipated in the 2022 Medium Term Budget Policy Statement.
• Infrastructure investment: Overall, the public sector is projected to spend R903 billion on infrastructure over the medium term. The largest portion of this, around R448 billion, will be spent by state-owned companies, public entities and through public-private partnerships.
• Climate change: The government’s Just Energy Transition plan addresses urgent climate challenges. It aims to significantly lower emissions of greenhouse gases and harnesses investments in new energy technologies, electric vehicles, and energy-efficient appliances.

Read the latest views and insights from our senior investment team on the Budget and its likely impact on ordinary South Africans.

Arthur Kamp: Chief Economist

“The near-term increase in the debt ratio mostly reflects Eskom debt relief amounting to R254 billion, while debt stabilisation is achieved through a projected improvement in the Main Budget primary balance (revenue less non-interest spending) from a surplus of 0.1% of GDP in 2022/23 to a surplus of 1.7% of GDP by 2025/26.”

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Patrick Buthelezi: Economist

“The finance minister delivered the budget for 2023 under very difficult macro-economic conditions, with a revised economic growth outlook to about 1.4% from 2023-2025 which indicates extremely difficult economic conditions.”

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Ockert Doyer: Head of Credit and Portfolio Manager

“According to the National Development Plan, we need to invest around 30% of our GDP into these types of infrastructure investments in order to make a real difference and contribute to job growth and unemployment. At the moment, it is running at 14% and the budget does not look to lift that figure substantially”.

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At Sanlam Investments, we understand the impact of the Budget on our clients, society and, our staff. We also understand that government requires private and public sector assistance to address these issues at a national level and we are committed to playing an active role in doing so.