The 2023 National Budget Speech delivered by Finance Minister Enoch Godongwana highlighted the challenging economic conditions currently facing South Africa. The country's growth estimates have been trending downwards, with ongoing power outages being identified as the main threat to economic progress. Eskom, the indebted power utility, continues to struggle, and the budget provided more details on measures aimed at alleviating its financial burdens. Additionally, the budget proposed two new tax incentives designed to encourage investment in renewable energy and independent electricity generation. Overall, the budget speech emphasized the need for urgent action to address the energy crisis and support economic growth in South Africa.

The Finance Minister, Enoch Godongwana, noted that global growth estimates for 2023 have been revised lower since the 2022 budget. The International Monetary Fund (IMF) projects a slowdown in global growth from an estimated 3.4% in 2022 to 2.9% in 2023. The minister highlighted that global economic risks remain high, including those related to the ongoing war in Ukraine, and could potentially hinder growth if they materialize.

 

In this year's budget, the South African government will maintain a prudent fiscal approach with a focus on reducing the deficit without increasing taxes or making further cuts to the social wage and infrastructure. This suggests that the government is looking to strike a balance between fiscal prudence and supporting economic growth in the face of global uncertainties.

In the 2023 National Budget Speech, Finance Minister Enoch Godongwana announced a proposed total debt relief arrangement of R254 billion for Eskom, the struggling power utility in South Africa. The debt relief will be provided in two parts: R184 billion, representing Eskom's full debt settlement requirement, to be paid in three parts over the medium term, and R70 billion, which is a direct takeover of Eskom's loan portfolio in 2025/26.

According to the minister, this debt relief will allow Eskom to avoid further borrowing during the relief period. The arrangement for Eskom will be subject to strict conditions to protect public funds, including prioritizing capital expenditure and maintenance of the existing generation fleet. The debt relief is expected to help alleviate Eskom's financial burden and contribute to the country's energy stability.

 

The update on the latest tax measures in South Africa to promote renewable energy investment and increase electricity generation.

1. Businesses investing in renewables will be able to reduce their taxable income by 125% of the cost of the investment from 1 March 2023 onwards.

2. Individuals who install rooftop solar panels can claim a rebate of 25% of the cost of the panels, up to a maximum of R15,000, for one year. This rebate can be used to reduce their tax liability in the 2023/24 tax year.

 

These measures are part of the government's efforts to shift towards a more sustainable and green economy. By providing tax incentives, businesses and individuals are encouraged to invest in renewable energy sources, which can help reduce greenhouse gas emissions and mitigate the effects of climate change.

The national budget has allocated R66 billion to the Department of Social Development. A portion of this, R36 billion, has been earmarked for the extension of the current Social Relief of Distress (SRD) grant, which was initially introduced as a temporary measure during the pandemic. This extension will run until March 2024. The remaining R30 billion will be utilized to provide inflation-linked increases for other grants, including the old age and disability grant, as well as the childhood support grant, among others.