How the budget affects you

AUSTERITY LINE: NO SOE BAILOUTS, EARLY RETIREMENT OF CIVIL SERVANTS TO CUT SPENDING

- Ina Opperman

Although Finance Minister Enoch Godongwana disappointed citizens who wanted a basic income grant increase and more basic foods to be exempt from VAT, he did not include any bailouts for state-owned enterprises (SOEs) in the medium-term budget policy statement (MTBPS).

He also allocated money for early retirement packages for public servants.

Godongwana said about R11 billion is budgeted for early retirement of government employees over the next three years.

Up to 30,000 government employees can qualify for voluntary early retirement over the next two years.

The MTBPS contained no bailouts for SOEs, although Transnet needs a loan guarantee, the SABC is technically insolvent and the Post Office needs R3.4 billion to execute its business rescue plan.

Godongwana also expressed his concern that government debt has risen too fast and is too high.

"We anticipate that government debt will reach more than R6.05 trillion, or 75.5% of gross domestic product (GDP), in 2025-26. We know that our debt is unsustainable because debt service costs have become the largest component of our spending and it is rising faster than economic growth.

"Debt service costs will reach R388.9 billion in the current financial year. This means for every R1 of revenue that government raises this year, 22 cents is paid in debt service costs."