Budget 2023

BUDGET WRAP | Govt to take on R254 billion of Eskom's debt as economists welcome 'sober' Budget


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23 February 07:05

23 February 07:05

22 February 17:40

Finance Minister Enoch Godongwana's Budget was described by economists and business bodies as pragmatic, solid, and sober. 

The ANC's alliance partner Cosatu, on the other hand, slammed what it called yet another "uninspiring and jaded" Budget based on failed "neoliberal macroeconomic framework. 

Godongwana's key announcement was the partial take-over of struggling power utility Eskom's debt. 

"Eskom’s debt relief of R254bn was larger than expected, an acknowledgement of how critical it is to free up financing for Eskom to be able to operate more efficiently," said Business Leadership South Africa. 

The Budget included no major tax increases, in part because of higher revenue projections. 

Godongwana also announced incentives to increase the uptake of solar panels. These were broadly welcomed, although some – like Prof Raymond Parsons of NWU Business School – noted that the incentives were still quite conservative. 

Business was generally unhappy about money more going to SAA, although Cosatu praised the move. 

Analysts also welcomed government revenue exceeding non-interest expenditure, although the fact that SA is paying over R350 billion a year to service its debt remained a major concern. 

In his address, Godongwana also acknowledgement that SA could be greylisted later this week by the Financial Action Task Force, which would make offshore investment more challenging and raise costs by placing additional administrative burdens on the finance sector.

Read News24 Business's wrap of the Budget here. 

Budget 2023's big news: Eskom debt, solar tax bonanza and tough choices

22 February 17:16

In a short statement, Eskom has said it "welcomes and is grateful for the financial relief afforded by the government in the budget statement". 

"Eskom will study the details of the plan before it can make any comment. A more substantial statement will be issued in due course."

22 February 17:15

Johann van Tonder,  economist for group strategy at Momentum Metropolitan, said it was good news that revenue exceeded non-interest expenditure. "The government is back to being a going concern". 

His colleague Hannes van den Berg, the CEO of Consult by Momentum, said he was concerned about what seems to be an imminent grey listing. 

"The minister’s closing comments implied that this would soon be a reality, which will make offshore investment far more challenging for South Africans. In addition, it will place a massive administrative burden on the financial services sector."

Prepare for possibility of grey-listing, warns Godongwana

22 February 16:50

Prof Raymond Parsons of NWU Business School says the Budget was "surprise-free, pragmatic, and credible".

"While the substantial debt-relief arrangement for Eskom is inevitable, it must be implemented in a way that overcomes the causes of the current malaise and supports the rapid development of the power sector as a whole to meet the critical supply and environmental problems being faced."

Parsons said the tax incentives to business and households to install solar panelling, while welcome, were still quite conservative.

And Treasury's assumption of an average GDP growth rate of 1.4% over the next three years strategy may be too optimistic, given that the SA Reserve Bank has a forecast of around 0.7% over the same period.

Calculate how this year's tax rates will hit your pocket here

22 February 16:45

If you missed the Budget address or want to catch up on the key announcements, News24 Business has summary of all our key coverage so far. 
Budget 2023 | Everything you need to know

22 February 16:39

Here is what Godongwana announced for South African Airways: 
SAA gets R1bn, future financial injections not ruled out

22 February 16:35

Agri SA has described the budget as "sober".

"While government could have gone further in addressing the challenges facing the agricultural sector, the budget reflected a sober analysis of the environment in which we operate."

"It demonstrated an understanding of the particular difficulties faced by the sector with significant implications for food security." 

The agricultural organisation particularly welcomed the extension of the rebate of the Road Accident Fund levy for diesel used by manufacturers of foodstuffs. It also praised the decision to not increase the sugar tax.

22 February 16:34

Business Leadership South Africa has described the budget as "solid". 

"We believe the markets will react positively in that [Godongwana] has addressed the country’s critical problem areas while retaining fiscal discipline, which has been the hallmark of both his and his predecessor Tito Mboweni’s time as finance minister."

While the country’s fiscal trajectory will weaken given the Eskom debt transfer, BLSA said this was necessary to help address the "crippling effects of loadshedding".

"Eskom’s debt relief of R254bn was larger than expected, an acknowledgement of how critical it is to free up financing for Eskom to be able to operate more efficiently."

The group said that it "despairs" at another R1 billion for SAA, saying this just it adds to the billions "wasted in trying to save the entity".

22 February 16:27

Trade union federation Cosatu has described the Budget as "uninspiring and jaded," saying the state was implementing the same failed "neoliberal macroeconomic framework that has been consistently applied since 1996".

Cosatu did welcome the state taking over R254 billion of Eskom's debt burden, saying this would free up resources for Eskom to target maintenance and invest in the new generation.  It also said it supported more funds for struggling state-owned enterprises SAA and the Post Office.  

But it was "dismayed" by silence on the creation of a state-owned bank.

And it called for more money for public servants, who were "disillusioned, overworked, highly indebted, and underpaid".

"The projected increase in the wage bill by 3.3% over the Medium-Term Expenditure Framework is tantamount to outsourcing the bill for corruption and the mismanagement of the state to public servants."

22 February 16:25

The incentives for solar power announced in the Budget have been welcomed.  

The Twelve B Green Energy Fund, a green private equity fund, welcomed the introduction of an allowance for homeowners for up to 25% of the value of their solar kit (up to a maximum of R15 000).  

"This means that a homeowner can invest up to R60 000 in a solar kit to get the maximum tax benefit of R15 000," the group said.      

"The minister is (also) to be congratulated on his foresight to increase the Section 12B tax allowance from 100% to 125%. This means that businesses will definitely look to invest in solar which will assist with the energy crisis in SA."  

Cape Town Mayor Geordin Hill-Lewis said the incentives would support households and businesses to "rapidly scale up power generation".  

"Our message to Capetonians is clear: there has never been a better time to invest in solar."  

SME services provider Lulalend, meanwhile, said Godongwana's address captured the "stark reality of South Africa's current economic situation".  

"Yet despite the challenges facing the country, there are reasons for hope, including the emphasis on sustainable energy, and the potential for green energy to start turning the energy crisis around."

Treasury FAQ for solar panel tax incentive

22 February 15:13

The first reactions to the Budget are stating to trickle in. 

Quickly out of the gate is SA Canegrowers, which welcomes the decision to not implement a planned increase in the Health Promotion Levy. 

"With the many serious challenges currently facing South Africa’s growers, the increase would have decimated the industry, costing the country much-needed jobs." 

22 February 15:08

As expected, the government introduced new tax measures for households and businesses to cut the costs of investing in renewable energy. 

Govt is so desperate to end load shedding it's happy to slash your taxes

22 February 15:06

Read News24's summary of Godongwana's announcements on taxes at the link below: 
All the big tax announcements

22 February 15:04

The government seems to be trying to manage expectations ahead of Friday's possible greylisting announcement by the Financial Action Task Force, a global anti-money laundering agency in Paris. 
Prepare for possibility of grey-listing, warns Godongwana

22 February 14:55

Here is what we know about the Eskom bailout: 
Huge bailout for Eskom to come with strings attached

22 February 14:53

Read News24's summary of the key takeaways from the Budget below. 
Budget 2023's big news: Eskom debt, solar tax bonanza and tough choices

22 February 14:52

The minister thanks all and sundry and ends his address. 

22 February 14:51

The finance minister is nearing the end of his address. 

"Our economy is facing significant risks. Uncertainty is on the rise. It requires us to do bold things. To put the fear of failure aside and execute the difficult trade-offs needed to get from where we are now, to where we want to be in the future."

22 February 14:49

As for the likelihood that SA will be greylisted by the Financial Action Task Force, Godongwana says country "should be prepared for that possibility".

"Addressing the FATF issues is part of the broader fight against corruption, crime, state capture and the deliberate weakening of the institutions of law and order in our country."

22 February 14:47

Money has also been put aside for recent spate of floods. 

"In relation to the recent floods and the national disaster declared in various provinces, R695 million is available in this financial year for immediate relief. A further R1 billion will be available next year."

22 February 14:44

Godongwana announces more funds for SAA and the Post Office. 

"R1 billion is allocated to South African Airways to assist the carrier with the business rescue process. The South African Post Office is allocated R2.4 billion."

22 February 14:43

The South African Police Service is allocated R7.8 billion over the medium term to appoint 5000 police trainees per year, he says. 

22 February 14:42

Treasury has budgeted another R36 billion to fund the extension of the COVID-19 social relief of distress grant until 31 March 2024.

The old age and disability grants increase by R90 on 1 April 2023 and a furtherR10 on 1 October 2023.

The child support grant rises from R480 to R510 on 1 October 2023, while the foster care grant increases from R1070 to R1130. 

22 February 14:39

As expected, excise duties for alcohol and tobacco have been increased.

A pack of 20 cigarettes will cost almost R1 more, while 340 millilitre can of beer increases by 10 cents.

22 February 14:38

The minister adds that, due to the "difficult operating environment for the sugar industry from the impact of flooding and social unrest", the health promotion levy will remain unchanged for the following two fiscal years.

22 February 14:36

The tax-free amount that can be withdrawn at retirement has been boosted by 10% increases to R550 000.

22 February 14:35

Meanwhile, the personal income tax brackets will be fully adjusted for inflation, which will increase the tax-free threshold from R91 250 to R95 750.

"This doesn't mean I am increasing it," he quips. 

22 February 14:35

The minister says the general fuel levy and the Road Accident Fund levy will not be increased this year.

A refund on the Road Accident Fund levy for diesel used in the manufacturing process, such as for generators, will be extended to manufacturers of foodstuffs.

22 February 14:33

The minister says that there are "no major tax proposals" in this Budget.

"Tax revenue collections for 2022/23 are expected to total R1.69 trillion. This exceeds the 2022 Budget estimate by R93.7 billion, and the 2022 MTBPS estimate by R10.3 billion."

The improvement in revenue, he says, is due to higher collection in corporate and personal income taxes, and in customs duties. This partially offset the lower value-added tax estimates.

"Madam Speaker, our country is reaping the benefits of a more efficient and effectivetax administration," he says to applause. 

22 February 14:29

The minister says that, as the government seeks to build infrastructure projects, the country needs to crack down on criminality in the construction sector.

"The extortion and intimidation of lawfully appointed contractors and the workers they employ cannot be tolerated."

He doesn't say how this will take place, however. 

22 February 14:26

The minister is announcing two tax measures to encourage businesses and individuals to invest in renewable energy and increase electricity generation.

"From 1 March 2023, businesses will be able to reduce their taxable income by 125per cent of the cost of an investment in renewables.

"There will be no thresholds on the size of the projects that qualify, and the incentive will be available for two years to stimulate investment in the short term."

Individuals who install rooftop solar panels from 1 March 2023 will be able to claim a rebate of 25 per cent of the cost of the panels, up to a maximum of R15 000.

22 February 14:23

Godongwana says Eskom will, in turn, provide "incentivised relief" to municipalities whose debt is unaffordable.

Municipalities owe Eskom R56.3 billion. 

"The relief will come with conditions. And to avoid a repeat of debt build-up over time, the relief will attach measures, including the installation of prepaid meters, to correct the underlying behaviour of nonpayment and operational practices in these municipalities."

22 February 14:21

Godongwana has given details about the major Eskom debt relief plan. 

"We are proposing a total debt-relief arrangement for Eskom of R 254 billion," he says. 

"This consists of two components. One is R184 billion. This represents Eskom’s full debt settlement requirement in three tranches over the medium term. Second is a direct take-over of up to R70 billion of Eskom’s loan portfolio in 2025/26."

22 February 14:19

The minister says a lack of reliable electricity supply is the country's biggest economic constraint.

22 February 14:18

The minister says the government will "soon switch-off the analogue signal and finalise the migration to digital signal".

"This will unlock the benefits of the spectrum auction and unleash renewed investment in the sector."

The switch-off has been promised for years. 

22 February 14:16

High debt costs mean that government non-interest spending will be kept below the level of revenue into the future, says Godongwana. 

22 February 14:14

"Mainly due to this Eskom debt relief, government debt will stabilise at a higher level of73.6 per cent of GDP and in 2025/26. This is three years later than anticipated in the2022 Medium Term Budget Policy Statement."

Government debt is high, he says. 

Debt-service costs are projected to average R366.8 billion annually over the medium term, reaching R397.1 billion in 2025/26. 

22 February 14:13

The minister references a "partial take-over of Eskom debt" - says he will speak more about it later. 

He adds that that the consolidated fiscal deficit is projected at 4.2 per cent of GDP for2022/23, and this will reach 3.2 per cent in 2025/26, including Eskom's debt. 

22 February 14:11

The first applause line of the afternoon comes when Godongwana says the state is bringing the fiscal deficit down "without resorting to tax increases or further cuts in the social wage and infrastructure".

22 February 14:10

Against low growth projections, the minister says government must maintain a "prudent fiscal stance".

22 February 14:08

Godongwana says the budget will focus on three pillars to raise growth. 

"Firstly, we are ensuring a stable macroeconomic framework to create a conducive environment for savings, investment and growth.

"Secondly, we are implementing growth-enhancing reforms in key sectors, particularly in energy and transport.

"And thirdly, we are strengthening the capacity of the state to deliver quality public services, invest in infrastructure and fight crime and corruption."

22 February 14:06

"We are tabling the 2023 Budget in a difficult domestic and global economic environment," says the minister. 

"Load-shedding has become more persistent and prolonged, impacting on service delivery and threatening the survival of many businesses."

22 February 14:05

Godongwana makes his way to the stage and starts his address.

22 February 13:54

The finance minister is expected to start speaking in about five minutes. 

22 February 13:34

Busisiwe Mavuso of Business Leadership South Africa notes that Godongwana will likely announce a fall in SA's projected GDP growth rate for 2023, 

"The SA Reserve Bank has already lowered its real GDP growth forecast of 1.1% for this year to just 0.3%. National Treasury will follow suit and is likely to forecast 2023 growth at below 1%,"she writes. 

22 February 13:23

The Organisation Undoing Tax Abuse, meanwhile, wants the minister to announce "final closure dates" for e-tolls in Gauteng. 

"Despite Premier Lesufi’s comment during his State of the Province Address on 20 February that 'e-tolls have been scrapped permanently in our province', the situation remains exactly as it has been since the finance minister announced in his October 2022 Medium-Term Budget Policy statement," says OUTA.  "The e-toll system remains intact and continues to bill motorists every day."

22 February 13:20

Business Unity South Africa is hopeful that Godongwana will announce some kind of support for rooftop solar, for both private and commercial citizens. 

This comes as Eskom continues to implement daily power cuts. 

The business lobby group says the state should also consider subsidies and facilitation for the manufacture of electric cars, "given our reliance on exporting vehicles".


22 February 13:16

On Friday, just two days after the Budget is delivered, Paris-based intergovernmental organisation the Financial Action Task Force will announce whether or not it has greylisted South Africa. 

Read about how greylisting will impact SA's already struggling economy at the link below. 

How greylisting will hit South Africans
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