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So Far So Good

Every year, the government pauses halfway through its financial year to check how things are going.

This mid year budget review looks at how much money has been collected, how much has been spent and whether the original plans are still on track. It is a simple check in that helps the country see what needs to change for the rest of the year.

One focus of Finance Minister Enoch Godongwana’s speech was on the various pressures coming from the USA which is affecting the global and local economy in many ways. So far South Africa has been able to weather the storm and keep moving forward despite many potential challenges.

There was also some good news. South Africa was recently removed from the international financial watchdog grey list, and the economy is showing signs of decent growth.

 With that in mind, there is even talk that international rating agencies like Moody’s and Fitch might lift the country’s ratings for the first time in many, many years. This gives both investors and the public some confidence that things may slowly be improving.

The review also shows that government spending is still very high, while tax income is a bit lower than hoped.

The review also shows that government spending is still very high, while tax income is a bit lower than hoped.

To fix this gap, the government wants SARS to crack down harder on the sale of goods that avoid tax. This includes illegal cigarettes, alcohol and even fuel. These products are often sold by gangs or shops that operate quietly in the background and do not pay the government what they should.

Finance Minister Enoch Godongwana also officially announced a new inflation target for South Africa.

The goal is now 3 % (with a one percentage point tolerance band), which is technically lower than before.

President Ramaphosa welcomed this and said that bringing inflation down over time will help bring interest rates down too. If that happens, it reduces the cost of living for everyone. These changes take time but are seen as a positive step.

 

You Should Also Review your Spending From Time To Time

If, in the past, you worked out a budget on how you would spend your money every month, it is good to review it after some time as costs can shift.

Mostly things like food, transport and electricity become more expensive over time. So reviewing your current earnings against your expenses is a good idea.

Even the government does it.