The Business School at the North-West University (NWU)’s second Pitso online seminar brought together economic experts to examine South Africa’s current financial situation. The discussion, titled Budgeting for Austerity, featured analyst and columnist Khaya Sithole, who moderated the webinar; independent economist Elize Kruger; and Sanisha Packirisamy, an economist at Momentum Investments. The trio discussed the government’s latest budget proposal delivered by Finance Minister Enoch Godongwana on Wednesday, 12 March, the challenges facing financial policy, and the potential impact on the country’s economic path.
Khaya Sithole opened the discussion by acknowledging the unstable financial landscape in which the budget was drafted. “We have had three weeks where everybody has been speculating about what might happen,” Sithole noted, pointing out that a large portion of the discussion was about generating income.
When questioned if the budget would pass, Elize Kruger maintained an optimistic tone. She acknowledged the complexities of the country’s Government of National Unity (GNU) but remained confident in its ability to find common ground. “I believe that the partners in the Government of National Unity will find each other,” she said. While she acknowledged that further negotiations and compromises could take place, Kruger emphasised that rejecting the budget adjustments, such as a 0.5 percentage point increase in VAT, would be harmful to political stability.
Kruger also highlighted a significant shift in governance, saying, “We need to look at expenditure in more detail. I did not see political will in the past 15 years, but now the situation has changed, and that could just be a positive for us looking forward.”
Sanisha Packirisamy took a conservative approach, warning that elements of the budget have historically remained unsettled even after being proposed. “Often in the past, some elements of the budget were not actually concrete by the first of April,” she explained, citing previous examples of postponed financial planning, particularly with regard to back pay and labour unions. Packirisamy further noted the Democratic Alliance’s (DA) potential resistance to the budget but issued a crucial caution, saying, “The DA can only reject this if they have an alternative proposal. And as we have discussed today, it is difficult to raise that amount of revenue elsewhere unless you actually cut back quite firmly on the expenditure side.”
Despite political disagreements, Sanisha remained hopeful about the broader financial direction. “Both sides of the GNU's major parties believe in fiscal restraint, in trying to achieve a primary surplus by the end of the medium-term framework. And that, in my opinion, is the good thing we ought to learn from this process,” Packirisamy concluded.
As the budget moves through the legislative process, Sithole underscored the difficulties of turning political will into tangible fiscal action. “There is indeed the political will that seems to have emerged, but I suspect that it has been forced. Do they have the political competence to get it all done?”
The success of the budget will depend on how well policymakers can oversee these challenging trade-offs given the state of the country’s economy. As the Pitso Webinar concluded, one thing that was clear: financial responsibility and policy negotiation will determine the country’s financial future in the months to come.
