Star 2021-11-12

Dineo Faku dineo.faku@inl.co.za THE NATIONAL Treasury yesterday flagged that the current year expenditure would breach the 2021 Budget Review ceiling of R1.51 trillion by R56 billion following the Covid-19 lockdowns and public violence, as well as wage bill adjustments. According to the 2021 Medium-Term Budget Policy Statement (MTBPS), revenue improvements since the 2021 Budget had made room for an increase in the spending ceiling over the Medium-Term Expenditure Framework period. It said the ceiling was raised by R30.5bn in 2022/23 and R28.1bn in 2023/24, compared with the 2021 Budget. Treasury said domestic risks identified in the 2021 Budget included the wage bill and the continued deterioration in the financial position of several major state-owned companies had materialised. As a result, spending increases in 2021/22 amounted to…

Siphelele Dludla siphelele.dludla@inl.co.za THERE was no aloe ferox plant, no quoting of Bible verses or dead poets, nor casual mentioning of sorghum beer when Finance Minister Enoch Godong- wana delivered his maiden Budget speech in Parliament yesterday. But for those who thought this signalled a departure from structural reforms and fiscal consolidation championed by Godongwana’s predecessor, Tito Mboweni, they were in for a disappointment as the umbilical cord remained intact. “In so far as fiscal framework perspective and structural reforms, we are on the same page,” Godongwana said of Mboweni during a pre-Budget media briefing. “I always tell him that ‘the only difference between the two of us is your shoes. I wear better shoes than you. But maybe I’m not good at cooking as well.” Godongwana yesterday tabled…

Siyabonga Mkhwanazi siyabonga.mkhwanazi@inl.co.za FINANCE Minister Enoch Godongwana has warned that state-owned entities (SOEs) continue to be a fiscal risk. He said yesterday they were sitting on large debts and low revenue. In the Medium-Term Budget Policy Statement (MTBPS), Eskom, Denel, SAA and others were flagged as posing a risk to the economy. The government has over the years been bailing out SOEs, but Godongwana has insisted that this will not continue as business as usual. He said they needed to practise tough love on the SOEs. “In so far as SOEs are concerned, one has to practise tough love. We have not made provision now in the MTBPS. If we will make provision in February, I…

Banele Ginindza banele.ginindza@inl.co.za MARKETS read some positives in Finance Minister Enoch Godongwana’s maiden Medium Term Budget Policy Statement (MTBPS), with the rand firming more than 1.5 percent to R15.24 per dollar late yesterday afternoon. This is as economists pointed out that the sheer quantum of debt, however, is still projected to climb further, with 2024/25s R5.5 trillion double 2018/19s R2.8 trillion, while the country’s credit risk, which is the perceived risk of default, has slightly moderated. Investec economist Annabel Bishop said this is still a decline in fiscal health as borrowings continue to rise, and this will not allow for any credit rating upgrades, nor likely a removal of the negative outlooks that key agencies have SA on. “Debt service costs continue to climb, but are fractionally lower…

THE 2021 Medium Term Budget Policy Statement (MTBPS) has seen the ex- pected improvement in the government’s debt-to-gross domestic product (GDP) projections and fiscal deficits. Over the medium term, gross debt is projected to now stabilise at 78.1 percent of GDP in 2025/26, from 88.9 percent of GDP in February, with the declining ratio not due to any major drop in borrowings, but instead the revisions to GDP. Gross loan debt came out at 70.7 percent of GDP for 2020/21, versus the 80.3 percent of GDP projection in the February 2021 Budget revenue, lowering the trajectory going forward. The following three medium-term years of 2022/23 to 2024/25 are projected above our forecasts of 73 percent, 74.5 percent and 75.7 percent of GDP, at…

AS IMPLIED by Finance Minister Enoch Godongwana, South Africa was largely saved by strong commodity prices as the economy got a windfall of R332 billion in extra income from exporting our primary commodities. In total over the last year South African exports were $30bn (R456bn) more than our imports. (Yes, that’s right, US dollars!) Simply put, without the positive trade balance nearly 9 percent of gross domestic product (GDP) would not be here today. Most of the positive trade balance comes from the high commodity prices. Agriculture and mining brought about a windfall of R120bn for government revenue. This gave the Treasury some room as they could spend billions on the disaster relief grant without increasing the government deficit. They lowered the government deficit ratio to GDP. Telling…