Controversial government spending cuts ‘paid off’

The medium-term budget policy statement has heralded the triumph of fiscal consolidation, with the chokehold on government spending nearing its end.

Despite this, Finance Minister Enoch Godongwana, who tabled the policy statement in parliament on Wednesday, has underlined the need for a continued prudent approach to fiscal policy.

The policy statement said that, by the end of 2023, government revenue will exceed spending for the first time in 15 years. 

The country’s gross loan debt is also set to stabilise at 71.4% of GDP in the 2022-23 financial year. This is two years earlier and at a lower level than expected in the February budget.

The improvement in the pace of debt stabilisation is largely a result of higher-than-anticipated inflation and the commodity-driven revenue windfall, according to the policy statement.

The improvement will be partly offset by the government’s plan to take over a large chunk of Eskom’s staggering R392-billion debt.