Minister Godongwana’s budget update sparks hope for economic improvement

With the 200-day mark of no load shedding surpassed and the GNU influence among other factors, hopes are high that the country’s economic prospects and forecast will be announced as looking good tomorrow.

Experts said Finance Minister Enoch Godongwana’s February budget forecasts were likely to be reinforced when he tables his medium-term budget policy statement (MTBPS) in parliament tomorrow.

Godongwana’s February budget forecasts likely to be reinforced

The purpose of the MTBPS is to set government policy goals and priorities, forecast macroeconomy trajectory and project the fiscal framework over the next three years.

In his February budget prediction, Godongwana projected the consolidated budget deficit to narrow from 4.9% of GDP in 2023-24 financial year with debt stabilising by 2025-26.

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But the minister expected the budget-guzzling debt-service costs to peak as a share of revenue in 2025-26 and decline thereafter.

The minister’s toughest battle had been to reduce debt to GDP and minimising borrowing as debt service costs come at the expense of service delivery which in turn bore electoral backlash for the political establishment.

Minister’s toughest battle

Whether Godongwana would continue with his strategy of robbing Peter to pay Paul in this year’s MTBPS remains to be seen but an element of that is inevitable considering that the country is not out of the woods yet.

But analysts believe that on the main matters would align with Godongwana’s February main budget estimates.

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