The minister of finance will table his budget proposals on February 21st, 2024.Some of the key predictions on the back of an election year are as follows:
- Interest Rates: There is speculation that the South African Reserve Bank (SARB) will cut interest rates in 2024. The expectation is that there will be two 25bp rate cuts in the second half of 2024.
- Inflation: Questions remain over whether high inflation will return to normal levels. There are arguments that inflation will remain elevated as wages and spending rise faster than before the pandemic.
- Fiscal Outlook: The finance minister has indicated that spending cuts and increased borrowing (not higher taxes) can be expected. The South African Revenue Service (SARS) is anticipated to improve compliance levels to bolster fiscal income over the medium term.
- Tax Gap: The country’s tax gap (the difference between taxes legally owed and taxes collected) is currently estimated to be more than R300bn. Reducing this by 10% would fund the tax shortfall of R30bn that is estimated for 2023/2024.
- Economic Growth: Sub-Saharan Africa, including South Africa, is expected to be a bright spot of economic growth this year.
Please note that these are predictions and the actual budget may vary. We will keep you informed of developments in this regard.