The medium-term budget policy statement presented by Finance Minister Enoch Godongwana will not change anything in terms of addressing unemployment and poverty.
This is the view of chief economists Azar Jammine and Duma Gqubule, who spoke to Sunday World after Godongwana’s address at the Cape Town City Hall on Wednesday.
Jammine said the medium-term budget presentation will not yield any economic growth needed to address unemployment.
“[With this budget] the government is pleasing the markets by increasing the budget deficits by less than has been expected,” said Jammine.
“The markets are probably satisfied with what has been presented because they know it is a bad situation, but they are of the view that government is managing to control it.
“Other than continuing with the [Covid-19 R350] SRD [social relief of distress] grant, they are not doing anything else that is dramatic.”
Growth insufficient to dent unemployment
He said the economic growth will be insufficient to address unemployment, noting that there is nothing dramatically different with the budget.
Jammine added that continuing with the grant is inevitable. “The government extended it for another year instead of making it a permanent feature.
“This suggests to me that there is still a lot of uncertainty on how to address this on a longer point of view. Nothing dramatic will change,” he said.
The minister said R34-billion has been allocated to extend the R350 grant by another year until the end of March in 2025.
Extension of grant welcomed
Gqubule said the extension of the grant is welcomed, but hastened to add that the grant amount is not in line with the food poverty line amount of R760 a month.
The medium-term budget, added Gqubule, will not effectively address unemployment for the next three years.
“We are excited it [SRD grant] has been extended, but the government cannot kick this can down the road forever,” he said.
“The finance minister says government has not made a decision on the basic income grant, meanwhile this R350 was introduced three years ago, and there has been record inflation over this period.
“So, the purchasing power of the R350 has declined substantially, and at the same time the poverty line is R760 per month. The grant amount is not adjusted with inflation and it is less than half of the food poverty line.
“This budget has no plan for the growth of the economy of the country.”
Gqubule explained further: “For more than 12 years the government has been telling us about structural reform but there is no economic growth and change.
“The man on the street wants jobs. With the minister saying the GDP [gross domestic product] growth will be 1.4% over the next three years, unemployment will increase by 1.5-million people over three years from 2024 to 2026.”
