Budget 2022 showcases a commodity tax bonanza, presents considerable social spend, and an improved debt trajectory for South Africa

SOUTH AFRICA - Report 24 Feb 2022 by Iraj Abedian

As he delivered his 2022 State of the Nation Address (SONA), President Ramaphosa made it clear that South Africa is currently facing “extreme fiscal constraints”, and this is the backdrop against which Finance Minister Enoch Godongwana yesterday delivered Budget 2022. Throughout his speech, the Minister made it clear that the National Treasury would continue to make tough decisions in order to ensure fiscal consolidation while at the same time continuing to put in place measures to help boost economic growth and employment creation.

In recognizing that the most important aspect of improving the country’s fiscus is through sustainable economic growth, Minister Godongwana highlighted government’s plans in this regard. In line with President Ramaphosa’s mission of using infrastructure investment as a big part of economic revival, Minister Godongwana communicated that investment in infrastructure would be accelerated. One of the important ways this will be accomplished will be through the implementation of the results of a recently completed review by the National Treasury of the Public-Private Partnerships (PPP) framework.

The framework endeavors to create a ‘centre-of-excellence’ for PPPs and other blended finance projects and will be a direct interface with private financial institutions for investments in critical government infrastructure programmes. Hence, this once again showcases the current admiration’s view that the private sector is a vital component of a healthy economy, while at the same time recognizing government’s current fiscal limitations.

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