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From National Treasury Sets Fuel Levy; Road Accident Fund Seeks Funding Hike Amid Crisis

How will the Road Accident Fund's funding request affect South Africa's public finances?

Increased fuel levies and RAF debt weigh heavily on South Africa's public finances. The Road Accident Fund's massive outstanding claims and ongoing operational costs place significant pressure on South Africa's public finances. The fund is eyeing a fuel levy increase to R3 per litre, which would add 75 cents to the current levy. This financial strain is compounded by the government's forecast that the fund's net liabilities will grow to R405.1 billion by 2028/29.

Reported by 2 independent outlets Written Oct 7
Effect
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How it reaches South Africa

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The facts so far

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  • The Road Accident Fund is eyeing a fuel levy of R3 (about US$0.18) a litre, which is a third more than the current R2.25 (about US$0.14).riotimesonline.com
  • The fund's liabilities for 2025/26 were estimated at R387.4 billion (about US$23 billion), with assets at R19.2 billion (about US$1.2 billion).riotimesonline.com
  • The fund now owes R449 billion (about US$27 billion) in outstanding claims.riotimesonline.com
  • Treasury forecasts the fund’s net liabilities will grow to R405.1 billion (about US$24.5 billion) by 2028/29.riotimesonline.com
  • Treasury expects gross government debt to stabilize at 78.9% of GDP in 2025/26.riotimesonline.com

Why it matters

The Road Accident Fund is a critical state entity responsible for compensating road users, but its financial instability poses a systemic risk to the national economy. The fund's massive deficit and outstanding claims mean that its financial burden is effectively a contingent liability for the South African state, impacting bond investors and overall fiscal health.

This situation is part of a broader debate over how South Africa manages its public services and infrastructure costs. While the government is studying new revenue sources, such as requiring foreign visitors to carry travel insurance, the immediate pressure remains on the existing fuel levy structure and the government's ability to manage its growing debt.

What we don't know yet

  • Will the government approve the Road Accident Fund's request for a higher fuel levy?
  • How will the planned amendments to the Road Accident Fund Act change the scheme's sustainability?

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What would change this answer

The government approves the R3 fuel levy increaseThe immediate cost burden on consumers and businesses will rise, increasing inflationary pressure across South Africa.
The government successfully implements a hybrid funding model with new revenue sourcesThe reliance on the fuel levy could decrease, potentially easing pressure on the national budget.

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The full eventNational Treasury Sets Fuel Levy; Road Accident Fund Seeks Funding Hike Amid Crisis Everything aboutSouth Africa

Brind's analysis is written by AI from the reporting linked above and can be wrong. It is not investment advice; do your own research.