Godongwana has to keep a ‘tight lid’ on spending: Economist

Reading Time: 2 minutes

Finance Minister Enoch Godongwana will have a tough job ahead of him when he presents his Medium Term Budget Policy Statement (MTBPS) on Wednesday afternoon.

Godongwana is expected to keep a tight lid on spending as tax revenues decline.

Analysts say government’s finances are under increased pressure due to various spending priorities including bailout requirements by ailing state-owned entities, increased social support, and a rising public service wage bill.

National Treasury’s proposed spending cuts include a freeze on hiring new staff, curbing non-essential travel and putting a hold on some infrastructure plans.

Economist at Momentum Investments, Sanisha Packirisamy says, “Going into an election year its going to be quite difficult for government to make meaningful cuts on the salary bill and other forms of expenditure. We have seen that government is trying to look into having a headcount freeze at government level, they’re also looking into cutting back on non-essential infrastructure projects, ultimately that’s not a good picture for South Africa in the longer term because higher levels of infrastructure then promote higher terms of longer term economic growth and potential growth in an economy so, that does concern us.”

Finance Minister Enoch Godongwana will on Wednesday deliver the medium-term budget policy statement

Meanwhile, Chief Economist at Efficient Group, Dawie Roodt says the country’s rising debt burden which reached around R4,8 trillion last year is expected to escalate even further this year.

He says the country’s growing budget deficit will increase government’s borrowing requirements which will come with higher interest repayment costs.

Medium-Term Budget Policy Statement I Minister must focus on other economic growth measures: Roodt