South Africa’s New Cabinet Have Accepted the Budget

South Africa’s new coalition Cabinet largely accepted the government’s existing fiscal framework, though sticking points may arise when allocations are made at budget time, Finance Minister Enoch Godongwana said.

Ministers from the so-called government of national unity met in Pretoria on Saturday and Sunday to map out priority areas over the next five years. It was the first time they’ve held a strategic planning session, known locally as a lekgotla, since the formation of a coalition government last month.

“We presented our macro-economic outlook and our fiscal strategy which broadly was accepted, and we take that as a positive development,” Godongwana said in an interview on Monday. “There were no major sticking points on the fiscal framework. The devil is going to be in the detail when the allocations come. During that period, people may raise issues which may stress the envelope a bit but for now we are on the same page.”

The National Treasury in February set a target of stabilising state debt at 75.3% of gross domestic product in the 2025-26 fiscal year. It’s currently at 74.1%, well above the emerging-market average of about 59%. The Treasury is expected to present its medium-term budget estimates in the fourth quarter of this year.

President Cyril Ramaphosa has said the new government plans to prioritise rapid economic growth to help tackle poverty and inequality. Among talking points at this weekend’s meeting were challenges the country faces in reviving growth and reducing the high cost of living, Godongwana said, without elaborating.

The minister ruled out the implementation of a proposed universal credit program, known locally as a basic income grant, in the immediate future.

“There is no money for it,” Godongwana said. “I am not commenting on the efficacy and the importance of the policy, I am just saying that for now, I do not have the funding.”

Godongwana’s upbeat comments about the weekend cabinet talks were echoed by Ramaphosa, who said the ministers were unanimous on almost all of the policy issues raised at the meeting.

“There was unanimity on nearly everything,” Ramaphosa said in remarks broadcast on state television on Monday. “It was a wonderful, wonderful, extremely wonderful cabinet lekgotla.”

Ramaphosa is preparing to open parliament on Thursday, when he will outline the government’s policy priorities, he said. His address will follow the South African central bank’s latest monetary policy committee meeting, at which traders reckon there’s a more than 30% chance of rates being cut.