Balance is a very important concept and in wine, even the positives aren’t positive when there’s no balance. But how important is balance in a budget? Finance Minister Enoch Godongwana’s 2023 Budget is generally considered to be balanced, but without being an economist, I’m in two minds about how positive that can be.
In wine, balance lies in the relationship between all the components – fruit flavour and fruit intensity, acidity, sweetness or lack of it, alcohol or weight and texture or tannins. (Read more) When everything comes together, you have something beautiful in your glass. Something that stands a better change at maturing well and is a safer bet when you need to pair (or balance) the wine with food.
When it comes to budgets, however, wouldn’t it be better when the budget is positive rather than balanced? Probably, but that might just be a dream and in the South African context, I guess, we are just relieved when there are some pros to balance the cons. Balancing your own budget means you are controlling debt and expenses to live within your means. And just as very few of us have a means that easily outshines our expenses, for our country, finding some balance in a budget is not all bad. So, what can we consider to be on both ends of the scale in the 2023 budget?
On the positive side, Godongwana announced a rebate on household solar panels and an even better incentive on sustainably energy for businesses, a social grants increase, personal income tax relief, no increases to the fuel levy, an adjustment to medical aid tax credits and even only inflationary sin tax hikes. For cash-strapped South Africans this is good news. Unfortunately, it seems like small steps for the short term. The reason we have to support solar and have to increase social grants, is because our power supply is in crisis and our population is poor. Help is of the essence, but what are the plans to change this situation? If we didn’t have to rescue, we would’ve been able to build and grow. Somewhere between the state of the nation address and the budget speech we were hoping to find a plan, but if it was there, I missed it.
There isn’t only this negative spin to the positive side of the budget, there is also a question about political motivation leading up to the general election in 2024. But perhaps that’s being too cynical. The SA economy has many challenges and while the budget tries to address these, one can’t help but being concerned. To start with, the Reserve Bank’s growth projection is at 0.3%, significantly lower than National Treasury’s 0.9%. While I don’t have a better plan, settling Eskom’s debt of billions of rand feels like money down the drain and then there is an acknowledgement of the looming greylisting, bad news for foreign investment.
Trying to balance poor economic growth, the disaster that is Eskom and possible barriers to foreign investment with short term reliefs is probably the best we can do for now, but I do think I’ll get more satisfaction from pouring myself a beautifully balanced glass of wine.