What trade-offs will Finance Minister Enoch Godongwana announce when he delivers his Medium-Term Budget Policy Statement (MTBPS) this afternoon?

There is no easy fix for stabilising South Africa’s debt levels while creating an environment for economic growth.

Questions on people’s lips are whether VAT will be hiked, if further borrowing will be announced and how government spending will be curtailed.

According to the National Treasury, the MTBPS sets government policy goals and priorities, forecasts the macroeconomy trajectory, and projects the fiscal framework over the next three years by outlining spending and revenue estimates.

When addressing the nation on Monday, President Cyril Ramaphosa said that for every rand government collects in revenue, 18c is spent on servicing our national debt, while on the weekend, Godongwana said if South Africa does not take decisive action, the country may run out of money by March.

“We continue to face domestic and global pressures, and our economy is growing too slowly for us to overcome the challenges facing our country,” said Ramaphosa on Monday.

“We therefore remain absolutely committed to stabilising our levels of debt and adopting a responsible fiscal policy.”

Godongwana has the immense responsibility of giving life to this trajectory and how he plans to do it will be revealed through the MTBPS.

According to an article published by SANews earlier today, North-West University Business School Prof Raymond Parsons said National Treasury has warned that ‘tough decisions will need to be taken in the medium-term budget’.

“A shortfall of about R100b is now widely forecast. Unless remedial steps are taken, the risks of another ‘fiscal cliff’ for South Africa will rise.

“This fiscal balancing act will, therefore, require a skilful but level-headed revised budget ‘mix’ and projections. It requires successfully managing multiple spending pressures at a time when political elections are pending in 2024,” he said.

The MTBPS will be tabled in Parliament at 14:00.