Key highlights from South Africa’s 2024 budget speech

The 2024 budget speech delivered by Minister Enoch Godongwana provided a detailed fiscal plan underpinned by specific figures to address South Africa’s economic challenges and growth ambitions. Here’s a summary with key figures:

Economic Outlook and Projections

• Global growth is expected to slightly increase from 3.1% to 3.2% by 2025.
• South Africa’s GDP growth is forecasted at 0.6% for 2023, a revision from an earlier estimate of 0.8%. From 2024 to 2026, growth is projected to average 1.6%.

Fiscal Strategy and Debt Management

• The budget deficit for 2023/24 is estimated to worsen to 4.9% of GDP from a previous estimate of 4%.
• Debt-service costs for 2023/24 have been revised up by R15.7 billion to R356 billion, accounting for more than 20% of revenue.
• A net reduction of R80.6 billion in non-interest expenditure is planned over the medium term, with revenue revised up by R45.6 billion.

Structural Reforms and Support Measures

• The reform of the Gold and Foreign Exchange Contingency Reserve Account is expected to reduce government borrowing and improve the Reserve Bank’s equity position.
• An additional R57.6 billion is allocated for critical services including teachers, nurses, and doctors’ salaries.

Infrastructure and Climate Finance

• A new R2 billion conditional grant is introduced to support the rollout of smart prepaid meters.
• Investment in public infrastructure is emphasized, with significant funding allocated to various sectors.

Taxation and Revenue Adjustments

• Tax measures are projected to raise an additional R15 billion in 2024/25, primarily through adjustments in personal income tax and excise duties on alcohol and tobacco.
• Excise duties on alcohol products are set for above-inflation increases between 6.7% and 7.2% for 2024/25. For example, a can of beer and cider will increase by 14 cents, and a bottle of spirits by R5.53.
• Tobacco excise duties will rise by 4.7% for cigarettes and by 8.2% for other tobacco products.
• Environmental taxes include a carbon tax increase from R159 to R190 per tonne of CO2 equivalent as of 1 January 2024, and the carbon fuel levy will rise to 11 cents per litre for petrol and 14 cents for diesel from 3 April 2024.

Social Welfare and Spending Plans

• Significant allocations were made to education (an additional R25.7 billion) and health (a total of R848 billion over the Medium-Term Expenditure Framework (MTEF)).
• Social grants increases include R100 for the old age, disability, and care dependency grants, with a R50 increase for the foster care grant and R20 for the child support grant.

Division of Revenue

• Provinces and municipalities are allocated R2.8 trillion over the next three years, with specific allocations for addressing the public-service wage agreement and supporting local government infrastructure damaged by floods.

For detailed information regarding tax rates, including those for individuals, businesses, and specific allowances or duties, clients should refer to the South African Revenue Service (SARS) or contact our professional team at BVSA. It’s crucial to stay informed about these changes to ensure compliance and optimal financial planning.