In the next two weeks, we will receive our third budget of the year.

It is essential for the nation to have a budget that promotes growth.

The complexity of this budget process arises from slow economic growth.

To ensure sustainable public spending, we need to achieve growth that consistently generates government revenue.

Currently, our politicians are facing difficult decisions, complicated by factors such as the trade wars that began in February, when the economic outlook was more positive.

As of now, our expectations for economic growth have declined.

This leads to reduced tax revenue for the government, as businesses are likely to become less profitable and consumer spending may decrease.

The budget situation we are dealing with is more challenging than it was two months ago.

As I have noted in prior communications, it is crucial that the budget does not result in increased debt levels to avoid worsening the bleak economic outlook.

The National Treasury has been working diligently to recover from the financial crisis that affected the government five years ago.

Ratings agencies have acknowledged this effort and have improved our credit outlook.

We must work to regain the investment-grade credit rating we lost in 2020.

Achieving this will lower the government’s borrowing costs and benefit the entire economy, aiding growth.

If we choose the opposite route and allow debt levels to rise, investors will demand higher interest rates for government bonds, leading to greater consumption of tax dollars and hindering economic growth.

This leaves us with two viable options: either increase taxes to boost government revenue or cut spending.

Politically, the National Treasury’s initial proposal to raise VAT has been firmly rejected.

The alternative is to find other taxes to implement or to identify areas for expenditure reduction.

The Treasury faces the challenge of limited options for raising taxes beyond VAT.

While some political parties support tax increases, personal income taxes and corporate taxes are already high by global standards.

As a result, any further increases may drive individuals and businesses to shift their economic activities elsewhere.

The Treasury’s research suggests this could lead to even lower tax revenues, as businesses exit the market, resulting in job losses.

Suggestions have been made for SARS to improve tax collection through enhanced efficiency and better collection practices.

While this is a commendable goal, it cannot be relied upon as a budgeting strategy.

Those of us in the business sector recognize that budgeting for expenditures is much simpler than budgeting for revenue generation.

Responsible budgeting is critical, and relying on anticipated excess tax revenues is not a prudent approach.

Therefore, the only feasible way forward is to align expenditures with our actual means.

This poses a politically sensitive challenge, as it can create winners and losers.

It is understandable that no politician wants to be the one to announce the termination of a government program.

However, every year, the government initiates new projects and adds new spending lines.

While beneficial, this also leads to an increase in initiatives that may not always provide value for taxpayers.

When it comes to cost-cutting, we need a mature and honest assessment of which government functions deliver value and the political courage to make necessary cuts when they do not.

Though it’s encouraging that our budget is subject to democratic scrutiny, the government of national unity, along with other parliamentary members, must show the political will to make potentially unpopular decisions.

Certainly, there are numerous additional measures we can take to stimulate growth, and one of our greatest assets is the collaborative relationship between business and government.

I am looking forward to the next meeting between organized business and the president, scheduled for this Friday.

Our previous meeting in January was productive, aligning us on crucial structural reforms.

Significant progress has been made in areas like electricity and logistics reform, but the global landscape has changed.

This shift occurred before the U.S. election and the implementation of tariffs.

During that meeting, we aimed for a 3% growth rate by the end of this year.

Due to global conditions, reaching this goal will now be challenging, but that should not deter us; rather, it should inspire us.

We must amplify our efforts to implement reforms that enhance our economy’s performance, as the urgency for action has escalated.

We need to closely consider how opportunities have shifted and ensure our partnership and plans are synchronized with the current global landscape.

The budget situation highlights the critical need for growth in our country.

We must break free from the low-growth cycle we’ve experienced for the past decade and a half.

Achieving this will require brave and innovative thinking, especially in our new global context.

I look forward to working with my business and government colleagues to accomplish this.

*This column was first published in the Business Leadership South Africa (BLSA) weekly newsletter. The author, Busisiwe ‘Busi’ Mavuso, is the CEO of BLSA.

*The views Busi Mavuso expresses in this column are not necessarily those of The Bulrushes.