The Medium-Term Budget Policy: What It Means for Accountants
The recent Medium-Term Budget Policy Statement (MTBPS) by Finance Minister Enoch Godongwana featured a pro-growth agenda, signaling significant changes for our economy. With a more stable energy supply and increasing consumer confidence, the focus remains on reviving the economy, driving growth, and creating jobs. As accountants, we play a key role in supporting this economic revival by helping clients grow their businesses, manage investments, and expand their workforce. Below we look at key areas from the speech and consider how they may impact on our work as accountants.
Infrastructure Development
We are excited about governments efforts to get the private sector involved in large-scale projects. This creates new opportunities for accountants involved in project finance, public-private partnerships (PPPs), and investment advisory. We can help businesses participate in these projects by structuring deals, managing risks, and ensuring compliance with new PPP regulations. Our guidance on public-private partnership arrangements, risk assessments, and blended finance mechanisms will be crucial as these projects roll out.
Eliminating Structural Bottlenecks: Operation Vulindlela
Operation Vulindlela is all about breaking down barriers in key sectors like energy, transport, and water. These sectors are essential for infrastructure development, and the reforms bring new opportunities for our clients, especially those in these industries. For us accountants, this means supporting clients as they navigate these changes—whether it’s advising on infrastructure projects, understanding the implications of reforms, or helping them seize opportunities in renewable energy and transport. The opening of the freight rail network and the focus on renewable energy are particularly exciting areas that could drive significant investments and partnerships. These initiatives are cutting across different sectors including tourism to communication industries.
Find out more on Operation Vulindlela and its initiatives and find new opportunities.
Role of SARS and Revenue Collection
As in the past, the South African Revenue Service (SARS) will play a pivotal role in supporting growth by ensuring effective revenue collection. The revised tax revenue estimate for 2024/25 is R1,840.8 billion, and SARS is focusing heavily on voluntary compliance, using data science, and leveraging AI to detect non-compliance. Ensuring compliance and helping clients maintain good tax status will become increasingly important.
SARS is also working to broaden the tax base, particularly by leveraging third-party data sources to identify unregistered taxpayers. As accountants, we’ll need to guide our clients through these compliance measures to help them meet their obligations and avoid legal trouble. SARS is also targeting illicit activities, particularly in tobacco and fuel sectors, so we need to ensure our clients remain compliant and transparent, especially if they operate in these areas.
Combatting financial crimes by bringing offenders to justice is a crucial step in creating a fair and transparent financial system. SARS is using AI and data science to detect dishonest taxpayers, improve debt collection, and expand the tax base. As accountants, we need to support these efforts by helping clients maintain transparent financial practices and comply with anti-money laundering regulations, contributing to a more sustainable and ethical economy.
Building a Capable State
A capable state that can deliver essential services effectively is a key focus of the MTBPS. We expect heightened emphasis on governance, financial planning, and monitoring of funds when working with government bodies or municipalities. We’ll need to be at the forefront of digital transformations—such as digitising grant disbursements and modernising financial systems—to ensure transparent and efficient financial processes.
Local Government Debt Relief
The municipal debt relief program is designed to strengthen local government finances, and accountants have an important role to play here. We’ll be involved in advising municipalities on financial recovery plans, optimising revenue streams, and ensuring compliance with debt relief conditions.
Modernising Procurement and Public Financial Management
The new Public Procurement Act represents a major shift towards greater transparency and modernization in government spending. For accountants, this means keeping up to date with changes in procurement regulations and advising clients accordingly. It’s also an opportunity to help clients improve their procurement practices to be both compliant and efficient, reducing waste and preventing corruption.
In Summary
The MTBPS lays the foundation for an economic revival deeply linked to structural reforms, infrastructure development, and fiscal discipline. As accountants, we need to stay a step ahead to ensure compliance, advise our clients on financial strategy and help them seize new opportunities. Whether you’re in the private or public sector the MTBS offers a clear roadmap for where your skills will be needed most.
With the government's pro-growth agenda, there is an increased demand for financial stewardship, strategic advisory, and a deeper understanding of how policy shifts affect businesses and public entities alike. Accountants must be prepared to engage proactively, ensuring that the journey towards inclusive growth and sustainable development is supported by sound financial management and insightful advisory.
Join CIBA’s 2024 Annual Practice Management Conference and hear future plans from key regulators!
CIBA Practice Management Conference Highlights
Day 1: Sector Focused Insights
Legal Practitioners: Financial planning, compliance, trust account management.
Construction: Project-based accounting, budgeting, capital management.
Agriculture: Seasonal cash flow, regulatory compliance, sustainability.
Schools: Budgeting, funding management, regulatory adherence.
Medical Practices: Billing, tax planning, healthcare compliance.
Technology & IT: Cash flow, R&D credits, growth adaptation.
Day 2: Regulatory Compliance Focus
Session 1: CIPC compliance, Companies Act updates, avoiding penalties.
Session 2: SME Launch Roadmap, growth initiative with CIPC, SACCI.
Session 3: NLC compliance, managing grant funding, reporting requirements.
Session 4: SARS tax updates, eFiling improvements, tax dispute handling.
Session 5: AML regulations with FSCA & FIC, best practices in compliance.
