The central message of the Budget in recent years has been that debt has been increasing too fast. Fiscal consolidation is again the overwhelming priority.

Thankfully, the Minister was able to report progress. Debt will peak at 75.1% of GDP in 2024/25, a year earlier than the 78.1% peak projected in the October 2021 Medium Term Budget Policy Statement. The Budget Review states that a primary surplus – revenue exceeding non-interest expenditure – will be achieved by 2023/24: “Achieving this objective will enable government to bring consolidation to a close.”

But the medium term budget framework does not ease the vice-like grip on spending that the treasury has imposed since 2019. Public service remuneration remains essentially flat in nominal terms, the social relief of distress (SRD) grant is extended only to March 2023, the Presidential employment initiative is funded only till March 2024 and consolidated expenditure, including unallocated reserves, increases by just 3.2% a year over the MTEF period.

Substantial additional allocations were made to accommodate the SRD grant, NSFAS student grants, provincial health and education salary costs and municipal services. Almost everything else faces declining allocations in real terms. The budget includes over R20 billion a year for Eskom, large allocations for SASRIA (to cover business insurance claims associated with the 2021 KZN and Gauteng unrest) and a capital injection for the Land Bank, but the Minister emphasised again his “tough love” approach to state-owned companies in distress. There was no funding for SAA, which makes Minister Gordhan’s announcement that the Takatso sale agreement has been concluded something of a puzzle – it is not clear where the necessary working capital will come from.

The overall fiscal position is much improved – whereas the 2021 Budget anticipated a consolidated deficit of 9.3% of GDP it turned out to be 5.7%. This is partly because Statistics SA revised its GDP estimate up by over 10% last year. But it is mainly because revenue turned out to be R200 billion more than was anticipated in February last year. This is a staggeringly large increase – over 13%. Over half of the revenue windfall was in company tax receipts, mainly from mining companies. But there were gains in all the main tax categories, and in non-tax revenue.

This suggests that the underlying growth momentum of the South African economy is already stronger than the treasury’s GDP projections. Table 4.5 in the Budget Review, for example, indicates that there are now 7.4 million individuals with incomes above the personal income tax threshold. A year ago, the estimate was less than 7 million.

Public comment on the budget has been more varied than usual. Some think the projections are too optimistic, others that the treasury has under-estimated growth and the turnaround in business prospects. Such an austere expenditure outlook for another three years seems implausible. A wide range of pressing issues remain unresolved – the liabilities of the Road Accident Fund, Eskom’s balance sheet, the Post Office, municipal service delivery, dysfunctional TVET colleges and skills training, maintenance of infrastructure, for example.

It is as if Minister Godongwana, in his first budget, has opted for a holding operation. Not yet sure of the path ahead, and with conflicting advice from various sides, he wants more time to review options and consult. The real budget this year, one suspects, will be the Adjustments and forward estimat