When finance minister Tito Mboweni delivers the medium-term budget policy statement (MTBPS) in parliament this afternoon, he will have to touch on nine important issues, says Sanisha Packirisamy, Economist at Momentum Investments.
She says post-pandemic nominal growth expectations, tax collection in a fragile growth environment, and developments in the on-going public sector wage bill dispute, are important issues to watch out for.
Attention is also needed for government’s ability to supplement pro-poor spending and drawing the line on state-owned enterprise funding, as well as its plan to achieve fiscal sustainability and address policy uncertainty. The momentum behind structural reforms and the implications for SA’s sovereign rating will also be closely watched.
“We expect real growth to average negative 0.8% between 2020 and 2023 in comparison to Treasury’s June 2020 forecast of negative 0.4%, given the high risk of load shedding into 2022 and a slow recovery in fixed investment back to pre-crisis levels.
“However, inflation is expected to materialise at a marginally higher level and our forecasts on nominal growth are broadly in line with those of Treasury,” Packirisamy says.
She stresses that efforts to stick to the proposed wage bill will elevate Treasury’s credibility, while drawing the line on state-owned enterprise funding will avoid further strain to government’s balance sheet.
Watch the proceedings live below, courtesy of SABC: