Civil society slams mid-term budget as economists urge caution

Civil society organisations have reacted angrily to Finance Minister Enoch Godongwana’s mid-term budget, saying it does too little for poor South Africans, The Citizen reported. Economists were more measured, praising some progress while questioning what it means for jobs and household budgets.

Criticism from civil society

Jo Mboweni, who leads the United Democratic Front (UDF) as national convener, said Godongwana had “forgotten the downtrodden”. He pointed in particular to youth unemployment, which he put at 54%. He also argued that black-owned and informal businesses, as well as non-profit groups that assist vulnerable people, were left out. Mboweni noted that the speech came while many workers face job cuts and after MPs approved higher pay and perks for themselves.

The UDF blamed the country’s growing debt on irresponsible borrowing from lenders such as the World Bank and the International Monetary Fund. It said paying off that debt would lead to tougher tax enforcement, especially for black-owned businesses, and complained that township economies received no subsidies.

Aliya Chikte of the Alternative Information and Development Centre said the budget locks in austerity. She said the economic growth forecast was lowered to 1.2% this year, from 1.6% in February. She also warned that the new fiscal anchor could force any extra spending to be paid for by cuts elsewhere. In her view, the budget surplus is being achieved while municipalities struggle, clinics are overcrowded and free basic services shrink. She said the R70.8 billion tax windfall would benefit banks and lenders rather than public services.

Economists see progress, but limited relief

Jurgen Eckmann, a wealth manager at Consult by Momentum, said government finances are recovering faster than household budgets. He noted that debt is now 78.4% of gross domestic product and falling, and that the deficit is slightly better than February’s forecast. But he said this “doesn’t put money back in your pocket this month”.

Eckmann said the fuel levy cut takes R1.50 a litre off petrol from 4 November, or about R75 on a 50-litre tank. Forecasts point to another price increase in November, so the saving may only cushion the blow. Diesel gets R3 a litre in relief, but that ends in January. He also warned against counting on temporary tax windfalls and advised households to build emergency savings.

Nkosinathi Mahlangu of the Momentum Group Foundation welcomed the commitment to infrastructure investment. However, he asked how fiscal progress would be turned into jobs for young people. SolarAfrica CEO David McDonald highlighted the Credit Guarantee Vehicle, which has $553 million (about R9.2 billion) in conditional capital commitments, as a step towards attracting private investment in infrastructure.

What this means for you

• The petrol levy cut starts on 4 November, but a fuel price increase is expected that month, so you may not notice the saving.
• Diesel relief runs only until January.
• Economists advise building emergency savings while growth is slow.

This story is based on reporting by The Citizen.