Finance Minister Tito Mboweni delivered his much-awaited medium-term budget policy statement on October 30 2019.
It’s South Africa’s most influential one as a review from credit ratings agency’s Moody Investors Services is scheduled for November 1 2019.
Has our government been able to carry out what was set out?
There are signs that investment spending has been strengthening:
- Growth in gross fixed capital formation rebounded to 6.1% in the second quarter.
- Mining grew by 14.4% in the second quarter.
- The private sector credit extension rose to 6.2% in September.
- Consumer price inflation was 4.1% in September, – lower inflation would be great for everyone.
- The National Treasury has now forecast that the economy will grow by 0.5 % this year, a revision downwards from the 1.5% growth that was forecast in February.
- Treasury expects economic growth to reach 1.7% in 2022. This growth will mainly be supported by household consumption and private-sector investment, it said.
- Sub-Saharan Africa is expected to grow by 3.6% next year.
- The finance minister thanked paying taxpayers; they are now expected to collect R1.37 trillion this year.
- This is R53 billion, or 4%, less than what was expected.
- The fiscal framework has weakened since the budget speech in February this year due to weak economic growth and low revenues.
- The consolidated budget deficit is now projected at 5.9% of GDP in the current year. The country’s debt continues to rise this year exceeding R3 trillion and is projected to rise to R4.5 trillion in the coming three years. Without any policy adjustments, debt will exceed 70% of GDP by 2022/23.
- Over the medium-term government spending will total R6.3 trillion. Education, social development and health have been given priority.
- The average wage increase in the public sector was 6.8% in 2018/19 or 2.2% above inflation.
- Treasury says that when adjusted for inflation, the average government wage has risen by 66% in the past decade.
- The government announced a compressive set of structural reforms for Eskom and the energy sector, with R230 billion supporting schemes set aside over the next 10 years.
- Despite decimated e-toll compliance by motorists, the finance minister urged South Africans to honour their e-tolls obligations.
- Government has made significant progress on a finance infrastructure fund which will be hosted by the Development Bank of Southern Africa.
- Government has set aside R100 billion over the coming decade to co-finance programmes and projects.
- The National Prosecuting Authority received an additional R1.3 billion, and the South African Revenue Service received an additional R1 billion for the next two years.
- Parliament is considering the proposed National Health Insurance Bill.
The finance minister ended his budget speech by saying that the government will be working on stabilising the country’s finances and lowering the debt trajectory through prudent borrowing and stringently managing expenditure