South African Finance Minister Godongwana Discusses Fiscal Strategies and Eskom Bailout Conditions in Joint Committee Meeting

In a comprehensive joint session with the Standing and Select Committees on Appropriations and Finance, South African Finance Minister Enoch Godongwana detailed the government’s fiscal strategies and addressed questions regarding Eskom’s bailout conditions.

According to Parliament of South Africa, during the meeting, which took place on Thursday following the Minister’s presentation of the Medium-Term Budget Policy Statement (MTBPS) in the National Assembly, the National Treasury’s Director-General, Dr. Duncan Pieterse, outlined a three-year plan to raise GDP growth by addressing key issues such as electricity supply and infrastructure improvements.

The committees expressed unanimous approval of the continuation of the Social Relief of Distress Grant (SRD), a measure deemed critical for supporting vulnerable populations. However, members raised concerns over the vulnerability of public finances to both domestic and external risks, prompting the Minister to explain the employment of fiscal strategies aimed at risk mitigation.

Discussion points also included the “tough love” approach referenced in last year’s Budget speech concerning Eskom, South Africa’s public electricity utility. Dr. Pieterse assured the committee that the conditions stipulated in the Eskom Debt Relief Bill have remained consistent and are subject to enforcement, with the Treasury ready to present these conditions to Parliament upon request.

Amid queries on the potential for tax increases in 2024 to compensate for economic shortfalls and government debt, Minister Godongwana emphasized a commitment to responsible borrowing, spending restraint, and balanced fiscal approaches including revenue measures.

The session saw commendations from Mr. Sfiso Buthelezi, Chair of the Standing Committee on Appropriations, who, while recognizing some fiscal interventions as temporary, highlighted the necessity of job creation and economic stimulation. Further inquiries were made about the financial sustainability of extending the SRD grant, which has already amounted to R44 billion in expenditure.

Ms. Dikeledi Mahlangu, Chair of the Select Committee on Appropriations, supported the SRD grant’s extension, advocating for its evolution into a basic income support scheme.

Moreover, Mr. Joseph Maswanganyi, head of the Standing Committee on Finance, sought insights from the Finance Minister on state restructuring remarks and sought clarity on government programmes in light of the recently announced Economic Reconstruction and Recovery Programme, mindful of the repercussions from past restructuring efforts which saw the closure of universities.

The meeting underscored the government’s focus on maintaining fiscal integrity while fostering social welfare and economic growth amidst ongoing financial challenges.

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