Minister of Finance Enoch Godongwana is set to deliver this year’s National Budget Speech on 22 February, 2023.
As one of the most significant government addresses of the fiscal year, this speech sets the tone for South Africa’s potential growth, or decline.
It outlines the government’s economic policy and spending plans, making it an important annual event for all South Africans.
This year, the Budget speech will be delivered at a time when South Africans are already suffering from a skyrocketing cost of living and a persistent energy crisis that is essentially crippling our economic growth potential.
Janine Horn, Financial Adviser at Momentum, says, “It is critical that South Africans understand that the national budget directly impacts the financial position of our households. South Africans need to understand how the Budget address affects the cost of living, taxes and other aspects of household finances.”
“Interest rates and inflation are arguably the most significant financial challenges South Africans currently face, and these will also be addressed during the budget speech. However, both these factors are expected to remain stable for the time being,” Horn says.
Debt also plays a crucial role in households and will be addressed in the Budget speech.
“Sadly, many South Africans are currently drowning in debt, and because of this, the government is likely to announce new regulations that limit the amount of debt households can take on. The government may also institute incentives to urge households to lessen their existing debt,” she says.
When it comes to tax, she says Value Added Tax (VAT) is currently at 15%; however, it could be increased.
She says this will significantly impact consumers since they will have to pay more for specific goods and services.
“We might also see an increase in specific existing taxes, such as income tax. Not to mention, the government might introduce new taxes that penalise our lifestyles and income even further.”
Speaking to how South Africans can prepare their pockets for possible economic turbulence ahead, Horn says, “While the economic outlook may seem grim, you can fight back. A plan can keep you level-headed when faced with uncertainty. Revisit your household budget and analyse how the address may affect it. Speak to your financial adviser, as they are best positioned to aid you on your journey to financial success and can provide you with practical ways to not only survive but thrive despite the economic climate.
“Although the Budget speech may rock the boat, it is possible to stay in the captain’s seat with reliable advice that will set you on the right course on your journey to success,” Horn concludes.
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