Economists express positivity around recent budget speech
SANDTON – One economist was surprised that finance minister Tito Mboweni's budget included no major tax increases.
Chief economist at Efficient Group Dawie Roodt led a panel of high-powered experts in a dissection of the budget speech at Regenesys Business School in Sandton on 27 February.
CEO and founder of Inyathi Capital Travis Robson, chief economist at Investec Annabel Bishop, executive director at Saltlight Capital Management David Eborall, an economist at Absa Corporate and Investment Banking Miyelani Maluleke and CEO of MyWealth Investments Annatjie van Rooyen shared their largely positive reaction to the budget.
Roodt said that he was surprised that finance minister Tito Mboweni’s budget included no major tax increases. He was also surprised by the R160 billion public sector wage bill reduction, which he believes Cosatu will object to. Despite his largely positive reaction, Roodt said he also believes that more should have been said about the crippling state-owned entity known as Eskom.
“We are on a runaway train called debt. Nothing that the finance minister announced can deal with that debt. As long as we have a fiscal deficit, we are in a bad place,” said Roodt.
He explained that the speech came during a period when South Africa’s economy is experiencing minimal growth, with the average South African getting poorer. He said that state debt is currently sitting at 65 per cent of the GDP. His two reasons for this were the increase in the state wage bill over a number of years and the force-feeding of state-owned entities.
Bishop described the budget as ‘growth-supporting’. “The ship has turned in the right direction, but we will see if wage-bill cuts can be implemented. The question is, can they hold the course and persist?” said Bishop.
Maluleke said he was pleased with the government’s decision to move away from tax hikes and their intention to deal with the public-sector wage bill. “I don’t know how they will push it through at the labour union level. There are huge execution risks around this budget,” he added.
Robson said the budget offered hope for investors, positive news for the trading market and more efficient government spending. He said that struggling retailers who have experienced a massive drop in sales over the last year are far better off in 2020 with no VAT increase. “If our banks remain stable, we will see more foreign investments and more light at the end of the tunnel,” said Robson.
Van Rooyen concurred with Robson’s positive sentiments regarding market-friendliness and the good news for consumers but questioned the government’s continued support for SAA.
Panellists expressed varying sentiments regarding the imminent Moody’s review in March, with Bishop saying that Moody’s will see if the expenditure cuts can be implemented, while Robson said he was hoping for a positive result from the credit rating agency.
Related article:
https://www.citizen.co.za/sandton-chronicle/251409/budget-speech-2020-highlights/
