Economists satisfied with MTBPS but still concerned over SA's growth, debt

Finance Minister Enoch Godongwana delivered his Medium-term Budget Policy Statement (MTBPS) on Thursday, forecasting growth of 5.1% for this year.

Finance Minister Enoch Godongwana delivers his maiden Medium-term Budget Policy Statement in Parliament on 11 November 2021. Picture: GCIS.

JOHANNESBURG - While economists have welcomed the revenue windfall which has been used to fund many of the adjustments in the medium-term budget, growth and debt still remain the main concerns.

Finance Minister Enoch Godongwana delivered his Medium-term Budget Policy Statement (MTBPS) on Thursday, forecasting growth of 5.1% for this year.

He announced a gross tax revenue of R120 billion more due to an uptick in commodity prices and revenue from mines.

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But the minister has warned that it would be short-lived.

Economist at Sanlam Investments, Patrick Buthelezi, said that Godongwana's MTBPS was simply a good one and was in line with expectations but he said that major risks remained.

"Risks stemming from expenditure, demands from wages and also state-owned enterprises. What is important is that the economy needs to grow faster."

Economist at KH Equity Partners Dumiso Hadebe has echoed the minister's sentiments, saying that the tax records overflow was nothing that we could bet on.

"Sars has continued to do some work in terms of improving tax compliance, so I do anticipate that there would be some green shoots that would also be derived from there but there should be nothing of the scale that was recorded as a consequence of the high commodity prices.

Economists said that they were looking forward to the implementation of the structural reforms earmarked by the Treasury to create a more competitive economy.

Business Unity South Africa (Busa) said that while there was a sense of deja vu during the medium-term budget statement, it was encouraged by the finance minister's emphasis on growth and investments.

Minister Godongwana tabled his maiden MTBPS, where he kept the 2021 growth forecast unchanged at 5.1%.

However, the growth rate is expected to slow over the next two years to 1.7% - it's a rate that Treasury says is too slow to meet the country's development needs.

Busa CEO Cas Coovadia said that Godongwana sent the right message.

"I think that he emphasised quite a few times in the budget the need for economic reform, the need for government to actually intervene to promote growth and not impede growth the fact that growth in the private sector will create jobs if the environment will be appropriate for them to invest."

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