Economists seeking evidence of fiscal consolidation, minimising debt in Budget
Finance Minister Tito Mboweni will deliver a difficult budget in Parliament this afternoon against the backdrop of an economy battered by COVID-19 and lockdowns and a day after unemployment figures revealed a rising number of jobless.
CAPE TOWN - Economists will be looking to the finance minister for evidence of fiscal consolidation when he delivers his national Budget speech on Wednesday.
Tito Mboweni will deliver a difficult budget in Parliament this afternoon against the backdrop of an economy battered by COVID-19 and lockdowns and a day after unemployment figures revealed a rising number of jobless.
FNB chief economist, Mamello Matikinca-Ngwenya, said that she'd be looking out for granular details on plans to turn the economy around.
"I think what is quite critical, what people want to know, is the whole story around reform and growing the economy and what the plans are because ultimately if we want to reduce our debt and we want our primary balance to turn positive, there's a number of things that we have to do to grow the economy that would be quite critical."
Matikinca-Ngwenya said that tax revenue figures were likely to be better than expected and that would give the minister some room to manoevre.
"We don't expect to see any tax increases in this budget but I think is quite critical is how we deal with expenditure because that has been a problematic line item as well as state-owned entities. Very little was mentioned in the president's State of the Nation Address, which I think the finance minister will pick up on."
Economists are also hoping for concrete signs from Minister Mboweni that government is committed to minimising debt.
Econometrix chief economist Azar Jammine: "Markets are looking for clues regarding the commitment of the government towards fiscal consolidation and trying to tame the sharply rising trend of public debt to GDP."
But Jammine said that it was not a good idea to cut spending too much, especially in the light of the extreme economic hardships so many South Africans were facing.
"The key will be where does Mboweni exercise discipline and where does he actually suspend."
Jammine is hoping to see an overall narrowing of the nation's budget deficit.
"There have been indications in recent months that the growth in government revenue collections has not been anywhere near as severe as government itself had projected and one will hope that we will end up with a smaller budget deficit this year and for ensuing years."