Economists expect boost in SA's public finances ahead of medium-term budget
While the economic picture was dimmer earlier in the year, political stability post-elections could give the National Treasury some breathing room.
Economy printed on silver coin, stacks of gold and silver coins. Image: 123rf.com
JOHANNESBURG - Some economists expect the Government of National Unity (GNU), stable electricity supply and falling inflation to boost the outlook on the country’s public finances when the Medium-Term Budget Policy Statement (MTBPS) is tabled next week.
Finance Minister Enoch Godongwana is set to table the “mini-budget” in the National Assembly next Thursday, to give an update on the government’s bid to meet revenue targets and to manage the high debt costs.
While the economic picture was dimmer earlier in the year, political stability post-elections could give the National Treasury some breathing room.
Since last year, the macroeconomic environment has mostly improved – helped over the line by policy certainty and improved business sentiment, Eskom keeping the lights on for more than 200 days, the South African Reserve Bank finally starting its rate-cutting cycle and a stronger rand.
“This is the better environment we’re talking about and this environment can only mean higher economic growth and higher economic growth will result in higher tax revenue," said Nedbank’s chief economist - Isaac Matshego.
Despite some optimism about the public finances, there are still some pressure points, including high debt servicing costs, pressure from the public sector for double-digit wage increases and other expenditure items like bailing out state-owned enterprises.