Finance minister Enoch Godongwana will on Wednesday deliver the Medium-Term Budget Policy Statement (MTBPS) under a very difficult economic environment facing the country.
The country and markets are anticipating resolutions around the Public Sector Wage Bill and Eskom’s debt burden amongst others.
The biggest expectation will be the Basic Income Grant and whether or not it will be feasible in the near future and how the National Treasury will fund it indefinitely.
Investec Economist Annabel Bishop says inflation will increase the GDP figure but it is not necessarily a reflection that the country is improving.
Bishop says, “We expect to see the gross debt as a percentage of GDP and the fiscal deficit as a percentage of GDP both come out lower than was expected in February this year at the main budget and also to see the projections have come off as well. This is partly due to the fact that we are in a very high inflationary environment which has had the impact of deflating these variables. In other words, nominal GDP will likely be significantly higher.”
Privatising state-owned entities
The Democratic Alliance (DA) says, if it was in power, it would accelerate growth by privatising state-owned entities and getting rid of anti-poor policies.
The party briefed the media at Parliament on Wednesday on its alternative budget, ahead of the delivery of the mid-term budget speech.
The DA’s Deputy Spokesperson on Finance, Ashor Sarupen, says structural weaknesses in the economy are preventing it from growing.
“Continuous bailouts to SOEs have financed failing entities’ debt services, salaries, and current spending on suppliers. Apart from the contribution to employee consumption, there is no perceivable value added to growth and development in the sectors wherein these entities operate. Minister Godongwana must therefore remain firm on his pledge to not reprioritise budget items to bail out failing SOEs.”
Eskom’s debt clear
Civil society group, Section 27, says government must make its pronouncements on Eskom’s debt clear in its Mid-term budget policy statement.
Analyst at Section 27, Daniel McLaren, says if government does not present a clear debt management plan for Eskom, rolling blackouts will continue.
Eskom’s debt currently stands at R400 billion and the power utility is also struggling to maintain its existing infrastructure.
McLaren says, “We can have a new board and a turnaround plan, but if we are unable to invest in our infrastructure and undertake repairs and maintenance work that we need to do and move towards sustainable solutions, then we continue to have load shedding and that’s going to hold back the economy and then revenue and pretty much everything we are trying to do. I think some clear announcements in that regard would be very, very welcomed in that regard.”
VIDEO: Economists give their predictions of the balancing act faced by Godongwana:
Additional reporting by Zalene Merrington and Amina Accram.
