What does the MTBPS budget really mean?

Following Wednesday’s Medium Term Budget Policy Statement (MTBPS), here are some reactions, comments and insights from three experts in the unemployment, education and personal finance arenas.

“While Treasury’s plans to ramp up infrastructure development are welcome, I would eventually hope to see a plan tabled that would detail the percentage of unemployed youth to be recruited, who would support skilled and experienced labour to roll-out these proposed programmes. This is in line with the President’s statement several months ago, where he recommended that work experience should be removed as a requirement for young candidates who want to work in the public sector.

This focus on infrastructure could also unlock opportunities for new SME entrants in the construction space.

From a socio-economic perspective, while the global conflicts and geopolitical tensions pose a risk to SA’s macroeconomic stability, this uncertainty could pave the way for increased trading within the continent, which could even be ring-fenced to bolster qualifying SMEs and specific sectors.

The Minister’s early retirement proposal to make way for youth in the workplace sounds promising but it is going to be interesting to see how this will play out practically…especially given that only a tiny percentage of South Africans have enough retirement savings to retire comfortably.

It’s clear that tax revenue collection remains a key challenge for Treasury – which is no surprise in an economy with a stratospheric unemployment rate. While the Minister did highlight the need for job creation, he was very thin on detail around the plans to tackle unemployment. I am hoping for more detail in the 2025 Budget Speech.”

“The Finance Minister’s MTBPS was another balancing act between fiscal constraint and ensuring the allocation of funds to vital areas, with the Minister outlining Treasury’s plan to manage the country’s deepening debt while ensuring national priorities are addressed. The speech was thin on any plans to increase resourcing for education – except to say that it would protect the social wage – and so it doesn’t look like there will be any increased funding for education for now.

The silver lining? Government can be commended on the strides it has made in the primary surplus, which will contribute to its goal of making state debt servicing costs more manageable. This is no small feat.

This will hopefully give government a bit more wiggle room to invest in vital institutions like education as proposed in previous budgets, so we’re optimistic that more measures will be outlined to encourage this in the 2025 Budget Speech.”

“While there were some green shoots of hope outlined in the MTBPS – such as the relief in interest rates and loadshedding – the outlook for economic growth remains low, with government anticipating a real GDP growth of 1.1% in 2024… lower than the already-low estimate of 1.3% in February. Government is walking a tightrope: it knows that it needs to rein in spending and manage its debt but it must still allocate funds to vital areas to drive growth.

Hot potatoes remain the public sector wage bill, the SRD grant and NHI, which government is under political pressure to deliver. Yet, as highlighted by the Finance Minister, tax revenue collection remains a pain point. This is likely partly why these aspects were skimmed over in the Finance Minister’s speech – except for the Minister indicating that expenditure for this year will increase for the SRD grants when compared to the February estimates, and that digitisation of health records to support the roll-out of the NHI would be a priority.

In short, while there is some positive progress, especially in terms of budget surplus and reduction in the wage bill, it is clear that South Africans will remain under financial pressure for some time longer.”