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Budget Speech

Municipalities sign up for Eskom debt relief programme

Location: News

Municipalities sign up for Eskom debt relief programme

At least 70 municipalities have applied for and been approved for the Eskom debt relief programme introduced by National Treasury last year.

The debt relief programme is aimed at assisting ailing municipalities to pay off their bulk electricity supply debt to the power utility.

This was revealed in the 2024 Budget Review drafted by National Treasury.

“By December 2023, 72 applications had been submitted, totalling R56.7 billion or 96.9 % of total municipal debt owed to Eskom at end‐March 2023. [Some] 70 applications totalling R55.2 billion had been approved as of January 2024, said Treasury.

Once municipalities are admitted into the programme, strict conditions set by Treasury have to be followed in order for the debt to be written off over a three-year period.

“These conditions include enforcing strict credit controls, paying their monthly electricity accounts and enhancing revenue collection,” Treasury said on Wednesday.

Smart meter conditional grant

In the Budget Speech tabled by Finance Minister Enoch Godogwana, Treasury announced that a new conditional grant will be introduced to increase the rollout of prepaid smart meters.

“A new conditional grant will be created to fund the rollout of smart prepaid meters, initially in municipalities that have been approved for Eskom debt relief. The National Treasury will distribute this grant.

“A total of R2 billion has been allocated for the grant, made up of R500 million in 2024/25, R650 million in 2025/26 and R800 million in 2026/27,” the department said.  – SAnews.gov.za

 

NeoB
Wed, 02/21/2024 - 14:15

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Load shedding, logistics hamper growth

Location: News

Load shedding, logistics hamper growth

Finance Minister Enoch Godongwana says although structural reforms have made “good progress”, load shedding and freight rail challenges remain an obstacle.

He was speaking during the Budget Speech held at the Cape Town City Hall on Wednesday.

“We have embarked on a broad structural reform agenda that aims to address the challenges that have held back our growth.

“This agenda has included areas like electricity, logistics, water, telecommunications and visa reforms. The Budget Review details the good progress that has been made in these areas over the past few years. But, obstacles remain and let me focus on the two largest of these,” Godongwana said.

Godongwana said the rolling power cuts “disrupt production, operations and livelihoods”.

“Reforming the sector will result in long-term energy security. We took the necessary decisions in the past five years and these are bearing fruit. 

“To promote further investments in renewable energy, this budget proposes an increase in the limit for renewable energy projects that can qualify for the carbon offsets regime, from 15 megawatts to 30 megawatts,” he said.

He revealed that in the coming week, the report on the independent review of Eskom’s coal-fired power stations will be released.

“The review was done to inform part of the conditions attached to the debt relief plan. The recommendations will feed into Eskom’s corporate plans to bolster accountability and oversight.

“It is through the combination of private investment in new energy projects, rooftop solar installations and improvements in Eskom’s generation fleet that load shedding will reduce, and reliability and security of supply improve,” he said.

READ | Ramokgopa sets sights on accelerated transmission line expansion

Turning to South Africa’s logistics challenges, the Minister revealed that third-party access to the freight rail network will be introduced by May 2024.

“In ports, a private partner has been secured to upgrade Pier 2 of the Durban Container Terminal. This should increase private investment in equipment, enhance technological capability and improve operational efficiency.

“Government has provided Transnet with a R47 billion guarantee facility to support the entity’s recovery plan and meet its immediate debt obligations.

“Like Eskom, the guarantee comes with conditions. These conditions require Transnet to focus on its core activities, and for the entity to introduce private sector partnerships. This will improve Transnet’s sustainability and support the implementation of the Freight Logistics Roadmap,” Godongwana said. – SAnews.gov.za

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Wed, 02/21/2024 - 14:17

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Hope is on the horizon despite South Africa’s economic challenges

Location: MyPR

Hope is on the horizon despite South Africa’s economic challenges The nation’s eyes and ears will be focused on Cape Town today as Finance Minister Enoch Godongwana presents the 2024 National Budget. It is no secret that South Africa faces a challenging economic climate where austerity is the phrase most commonly used during the Budget. …

Read moreHope is on the horizon despite South Africa’s economic challenges

Treasury to tap into foreign exchange account to reduce debt service costs

Location: News

Treasury to tap into foreign exchange account to reduce debt service costs

A combination of high debt servicing costs and a higher budget deficit has led to the introduction of a new reform of the Gold and Foreign Exchange Contingency Reserve Account (GFECRA).

The reform is aimed at mitigating fiscal risks by reducing government borrowing in the medium-term and will allow government to draw down from its GFECRA held at the Reserve Bank.

This was announced by Finance Minister Enoch Godongwana during the tabling of the 2024 Budget Speech held in Cape Town on Wednesday.

GFECRA is a Reserve Bank held account which captures gains and losses on South Africa’s foreign currency reserve transactions and the account has grown to more than R500 billion.

“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,” he said.

The draw down is expected to result in a decline of some R30.2 billion in government debt servicing costs over the 2024 Medium Term Expenditure Framework (MTEF).

Godongwana explained that national government debt is expected to peak at some 75.3% of the Gross Domestic Product (GDP) in 2025/26 with 2023/24’s budget deficit estimated to worsen to 4.9 % of GDP.

Debt-service costs in 2023/24 have been revised higher, by R15.7 billion to R356 billion.

The Minister said this will require that government stick to its fiscal goals with cuts in expenditure reaching more than R80 billion.

“Debt-service costs will absorb more than 20 % 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. 

“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 [the] 2023 MTBPS [Medium Term Budget Policy Statement]. [This is why] we have taken the decision to introduce a reform…GFECRA,” he said. – SAnews.gov.za

 

NeoB
Wed, 02/21/2024 - 14:19

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NHI receives R1 billion allocation

Location: News

NHI receives R1 billion allocation

The health sector is expected to receive an allocation of R848 billion over the Medium Term Expenditure Framework with at least R1 billion directed to the National Health Insurance (NHI).

This was announced by Minister Enoch Godongwana during the 2024 Budget Speech on Thursday.

“These allocations include R11.6 billion to address the 2023 wage agreement, R27.3 billion for infrastructure, and R1.4 billion for the NHI grant over the same period. 

“The allocation for the NHI is a demonstration of the government’s commitment to this policy. There remain a range of system-strengthening activities, that are key enablers of an improved public health care system, that must be undertaken,” Godongwana said.

He said these activities include:

  • Building a national health information system and digital patient records;
  • Upgrading health facilities and improving quality of care to ensure that they meet the minimum criteria to be certified and accredited for contracting under NHI;
  • Strengthening facility and district management in preparation for contracting;
  • Granting semi-autonomous status for central (and potentially other) hospitals; and
  • Developing reference prices and provider payment methods for hospitals.

In the 2024 Budget Review, National Treasury noted that the budget for the sector is expected to grow slower than inflation over the MTEF “due to the R23.7 billion baseline reductions over the medium term”.

“The function will prioritise greater efficiency, better management of commuted overtime and intensified promotion of preventative care. Spending reviews in the sector have led to some savings in vaccine and antiretroviral tenders. The health sector continues to recover from service disruptions due to the COVID‐19 pandemic, particularly in antiretroviral treatment and tuberculosis screening and treatment.

“The Department of Health and its provincial counterparts will prioritise building tertiary services like oncology through earmarked funds in the national tertiary services grant in provinces with inadequate services. This grant grows by 8.8% in 2024/25 as funding is shifted into it from the oncology portion of the national health insurance conditional grant,” Treasury said.

Education Sector

Turning to education, he said the sector will receive some R25.7 billion “carry-through costs of the wage increase over the medium term”.

“At the same time, we were able to protect the budgets of critical programmes such as the school nutrition programme. The programme provides food to pupils in almost 20 000 schools. 

“The early childhood development grant is allocated R1.6 billion rising to R2 billion over the medium term,” he said.

Firm eye

Government is expected to keep a firm eye on value for money as consolidated government spending is expected to reach R2.37 trillion in 2024/25, R2.47 trillion in 2025/26 and R2.6 trillion in 2026/27.

This is according to the National Treasury’s 2024 Budget Review.

“Government’s priority is to enhance spending quality and minimise inefficiency while ensuring sustainable public finances – in other words, to increase the value for money from this spending,” the department said.

The bulk of the 2024/25 budget will go to basic and tertiary education, peace and security.

“While R69.4 billion is added to this function for the carry‐through costs of the 2023 public‐service wage agreement over the medium term, there are baseline reductions of R49.8 billion in other areas. Improved efficiency in the procurement of learner‐teacher support materials and in the management of the placement of educators will continue.

“Spending in the post‐school education and training sector grows by 2.5% over the medium term. Spending in the sector education and training authorities and the National Skills Fund grows by 3.9% over the medium term, allowing the institutions to improve the quality of their offerings,” Treasury said. – SAnews.gov.za

 

NeoB
Wed, 02/21/2024 - 14:35

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The Full 2024 Budget Speech

Location: News

As delivered by Enoch Godongwana, Minister of Finance, on 21 February 2024 in Parliament, Cape Town: Honourable Speaker, Nosiviwe Mapisa-Nqakula His Excellency, President Cyril Ramaphosa His Excellency, the Deputy President Paul Mashatile Cabinet Colleagues Members of the Executive Committees for Finance Honourable Members The Governor of the South African Reserve Bank The Commissioner of the …

Read moreThe Full 2024 Budget Speech