S.A budget expectations for 2024

South Africa is gearing up for the 2024 budget announcement, with expectations running high for critical decisions to be made regarding the country's economic future. CNBC Africa's Palesa Mofokeng recently spoke with Isaac Matshego, Economist at Nedbank Group, to shed light on the key areas of concern and the challenges that lie ahead. The interview delved into various topics, including the need for a budget that caters to everyone, the importance of addressing the growing debt burden, the impact of budget deficits, and strategies to boost investor confidence. Matshego highlighted the need for a balanced approach that supports the local economy while ensuring the sustainability of government finances. One of the major concerns raised in the discussion was the rising debt service costs and the plan to achieve a more sustainable debt figure. Matshego emphasized the importance of containing the budget shortfall and addressing the factors contributing to escalating debt service costs, such as the Eskom debt package and the anticipated bailout for Transnet. The potential allocation of $25 billion annually for the next three years to Transnet was mentioned as a significant financial commitment to help alleviate the company's $130 billion debt burden. The conversation then shifted to the budget deficit, with Matshego highlighting the factors leading to a forecasted deficit higher than 5%, including weaker revenue growth and increased expenditure. The discussion also touched on the allocation of funds towards capital expenditure (Capex) and the challenges of attracting foreign investors amidst capital outflows. Matshego stressed the need for the government to enhance investor confidence by implementing supportive policies and addressing delays in policy implementation. He emphasized the importance of creating an attractive investment environment to compete with other emerging markets and boost investor interest in South Africa. When discussing tax policies, Matshego cautioned against raising taxes, citing its counterproductive impact on economic growth. Instead, he advocated for focusing on growing the economy to expand the tax base and increase tax collections. In closing, Matshego shared his expectations for the upcoming budget announcement, highlighting the need for measures that prioritize economic growth over populist measures. As South Africa prepares to navigate its economic challenges, the insights provided by Matshego shed light on the critical issues that need to be addressed in the upcoming budget. With a focus on sustainability, fiscal responsibility, and investor confidence, the decisions made in the budget will have far-reaching implications for the country's economic trajectory.