By Tarryn-Leigh Solomons
Efficient Group Chief Economist Dawie Roodt offers his insights on South Africa’s upcoming Budget Speech, scheduled for 12 March. According to Roodt, the budget will be less expansionary, which is likely to impact economic growth in the short term.
“It won’t provide much support for employment creation, especially for women,” Roodt explains. “With inflation remaining a key concern, balancing the need to control inflation while stimulating growth will be a challenge. Unfortunately, the budget will likely contribute to inflation, as the fiscal accounts are inherently inflationary.”
Roodt suggests that reducing economic stimulation could help ease inflation. “The current stimulation efforts are only adding to the inflationary pressure. What we really need is a more measured approach.”
On the topic of infrastructure investment, Roodt is sceptical. “While infrastructure investment can boost economic activity, the reality is we lack the funds. Most of our budget is consumed by current expenditure, leaving little room for new investment.”
When asked about the budget’s commitment to renewable energy and green technology, Roodt remains unconvinced. “They talk about it all the time, but there are far more pressing issues. The president will likely make statements about green technology, but the budget will do very little in this area.”
Minister of Finance Enoch Godongwana was set to deliver South Africa’s 2025 budget on 19 February but was postponed due to disagreements among government unity partners over the proposed two percentage-point VAT increase.
