CAPE TOWN – Finance Minister is faced with the mammoth task of presenting the Medium-term Budget Policy Statement on Wednesday and it will not be easy at all with a VAT hike, rising fuel prices and real cuts in key social spending areas were announced in the February budget.

The tax increases have already placed significant strain on taxpayers and non-taxpayers alike, according to Mike Teuchert, National Head of Taxation at Mazars, who said it was hoped that the MTBS would show South Africans whether their sacrifices over the last six months had made a positive impact so far.

Meanwhile, the parliamentary budget office has forecast that the national budget deficit would reach 4 percent of gross domestic product (GDP) this year, compared to National Treasury's estimate of 3.6 percent.

The South African Reserve Bank has cut its estimate for South African gross domestic product (GDP) expansion to 1.2 percent from 1.7 percent, while the World Bank’s most recent predictions place GDP growth at 1 percent, and the International Monetary Fund (IMF) had almost halved its expected growth rate from 1.5 percent to 0.8 percent.

The Budget Justice Coalition (BJC), a coalition of about 20 progressive civil society organisations, said austerity was being implemented at a time when South Africa required a massive state-led social investment strategy and a fiscal stimulus which both creates jobs, redistributes resources and provides quality services to the poor.  

The BJC said: “We hope that Minister Mboweni’s tenure is characterised by a radically pro-poor approach and the recognition of the state’s duty to implement fiscal policies that will make possible the realization of the socio-economic rights set out in the Constitution.”

The BJC said in South Africa everyone had the right to have access to social security. "Despite this constitutional guarantee, there is no provision for poor people between 18 and 59 years old.  Stats SA data consistently tells a story of growing destitution for millions living in South Africa. Not only is this a serious constitutional shortcoming, it is a betrayal of the democratic hope for a better life for millions of people, and it dampens economic growth."