Overview and unpacking the Budget Speech

Finance Minister Enoch Godongwana delivered his Budget Speech on Wednesday, which was fairly pro-consumer as there will be no increase in personal income tax or VAT. 

Despite the little wiggle room, he believes the 2024 budget will address macroeconomic stability, structural reforms and improvements in state capability to raise growth rates. There is a need to slow the growth of national debt and lower its cost with a number of measures intended to bridge the fiscal gap.

As broadly expected, the budget embodied several financial buffers for the medium-term fiscal challenge, including tight spending decisions, debt management and tax adjustments to balance the books, and the decision by government to introduce a reform of the Gold and Foreign Exchange Contingency Reserve Account (GFECRA), 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.”

Godongwana also said a new settlement arrangement is being introduced that will reduce government borrowing and improve the Reserve Bank’s equity position.

On the Fiduciary front, no changes to the likes of Estate Duty, Donations Tax and Transfer Duty (exemptions and rates).