https://www.engineeringnews.co.za
Africa|Energy|Eskom|Financial|Gold|Service|Transnet
Africa|Energy|Eskom|Financial|Gold|Service|Transnet
africa|energy|eskom|financial|gold|service|transnet

South Africa contingency reserves won't be spent on Eskom, Transnet – Godongwana

Finance Minister Enoch Godongwana

Finance Minister Enoch Godongwana

18th April 2024

By: Reuters

  

Font size: - +

South Africa will use future drawdowns of its Gold and Foreign Exchange Contingency Reserve Account to curb its debt burden, Finance Minister Enoch Godongwana said, adding he was pondering tax hikes and expenditure cuts in the next post-election budget.

Africa's most industrialised nation is grappling with an ailing economy and high debt ahead of a general election on May 29 that could see the governing African National Congress party lose its parliamentary majority for the first time since the end of apartheid 30 years ago.

Earlier this year, the government announced a change to the framework governing the so-called GFECRA account that captures gains and losses to foreign currency reserve transactions, allowing for a drawdown of 150 billion rand ($8 billion) over the next three years.

"Eskom is out, or Transnet," Godongwana told Reuters on the sidelines of the International Monetary Fund and World Bank meeting, ruling out financial support from the account for the country's ailing state-energy firms.

"Debt service costs now have emerged the highest expenditure item - therefore that is a red flag."

Other measures were also on the horizon a bit further out.

The country's next 2025/26 budget - scheduled for February next year - could also see more pronounced adjustments than the last one, the minister said.

"If you want to do a fiscal consolidation you must do it far away from the election, and the timing for us is the budget that we will table on the 19th February 2025," said Godongwana, when asked about the absence of significant expenditure reductions in the recent budget.

The next budget, nearly a year down the line, must send a signal and timeline by which fiscal consolidation would be concluded, the minister added.

"Now that is going to require maybe well that we cut expenditure and maybe well that we tweak some taxes - it could be a combination of both," he said.

Another push the government would focus on in the months to come was consolidating the plethora of social spending measures and grants, said Godongwana.

Prospects for economic growth, currently forecast at 1.6% for 2024, could face headwinds if loadshedding were to intensify or Middle East tension to escalate.

"I factor in that there is a possibility of downside risks."

However, the recent droughts that have wreaked havoc across much of Sub-Saharan Africa, including South Africa itself, would have no impact on food inflation, at least for now, he said.

Edited by Reuters

Comments

Showroom

The Southern African Institute of Mining and Metallurgy
The Southern African Institute of Mining and Metallurgy

The SAIMM started as a learned society in 1894 after the invention of the cyanide process that saved the South African gold mining industry of the...

VISIT SHOWROOM 
Goodwin Submersible Pumps Africa (Pty) Ltd
Goodwin Submersible Pumps Africa (Pty) Ltd

Goodwin Submersible Pumps Africa is sole distributors for Goodwin electrically driven, submersible, abrasion resistance slurry pumps.

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Uniclox at Nampo 2024
Uniclox at Nampo 2024
Updated 7 hours ago
Dachser South Africa at Nampo 2024
Dachser South Africa at Nampo 2024
Updated 7 hours ago
AUTO-X at Nampo 2024
AUTO-X at Nampo 2024
Updated 7 hours ago
Astron Energy at Nampo 2024
Astron Energy at Nampo 2024
Updated 7 hours ago

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.323 0.385s - 159pq - 2rq
Subscribe Now