Mini budget in a nutshell

Tax revenue, growth, spending – everything is bleak.
Image: Shutterstock

At the end of what Finance Minister Tito Mboweni has described as a ‘long hard winter’, the economy is worse for wear with muted growth sharply undercutting tax revenue projections. Unemployment continues to rise while national debt and debt servicing costs have increased.

Read: The Medium-Term Budget Policy Statement 2019

Eskom and other SOEs

  • No plan announced on Eskom’s debt restructuring
  • Government has committed to the roadmap to unbundle the power utility into three subsidiaries comprising generation, transmission and distribution by 2022
  • Government will take a step back, allowing Eskom’s management to fix the utility
  • Conversations have begun involving SAA and potential equity partners

Read: Cost of saving Eskom continues to rise

SAA unlikely to ‘ever’ be sustainable in current configuration

Economic growth

  • National Treasury has downgraded its growth projections for 2019 to 0.5% from 1.5% in February.

Read: National Treasury downgrades 2019 growth forecast

The good and bad about MTBPS that Moody’s will watch

Revenue

  • National Treasury expects a tax revenue shortfall of R53 billion in 2019/2020, driven by weak economic growth which led to downward adjustments in income expected from personal income taxes, value added tax and company income tax
  • Significant tax increases over the past several years have left a moderate scope to boost tax revenue at this time

Read: R53bn-sized tax hole in 2019

NHI roll-out cost increased by additional R33bn a year

Fiscal famework

  • In 2019/20, the main budget deficit is estimated to widen to 6.2% of GDP, compared with the 2019 budget estimate of 4.7%, mainly due to lower nominal GDP, tax revenue shortfalls and financial support for Eskom
  • With the bailouts to Eskom, the country’s debt-to-GDP ratio is expected to grow from the 56.2% for 2019/20 estimated in the February budget to 60.8%, 57.8% versus 64.9% in 2020/2021 and 58.9% vs 68.5% in 2021/2022
  • National debt exceeded R3 trillion this year. It is expected to rise to R4.5 trillion in the next three years
  • If the status quo remains and government makes no policy adjustments, debt will most likely exceed 70% of GDP by 2022/23

National Prosecuting Authority

  • The NPA will receive an additional R1.3 billion for the 2019/20 to 2022/23.
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Kry vir julle! Dear cANCer, ever heard of the multiplier effect? Go and read about it in an Unisa Macro-economics 101 handbook. The more you tax, the less your income WILL become. Sounds strange to you? Oh, I forgot you only barely know how to operate an AK47, nevermind an advanced economy.

They said that they will make SA ungovernable… well done on keeping that promise, how does that feel to be an anc voter now ? And if you don’t feel like you have contribute negatively then chances are you just as blind as the leaders.

Let’s just hope the Bokke win the world cup. That way the rest of the world want Skilled South Africans and they can leave it to the unproductive political leaders…

They didn’t even need Winnie with her matchboxes and tyres.

Thank you Minister of Finance. You just caused the rand to fall accompanied by a massive bond sell-off. Well done! Moodys, stop messing around and downgrade SA to junk status.

Well done, T Mboweni. You just caused a massive bond sell-off and rand falling off a cliff, but this is no surprise because your presentation was more about making jokes than tackling a dire economic crisis. Oh best of all, we’ll back away from Eskom to sort out there own problems. What an incompetent government we have and then you want us to pay taxes?

Let the IMF bail us out and take over : its the only way we will get some non ANC political discipline into RSA .

IMF? Don’t you mean China and Russia? They’re chomping at the bit to get their hands on our natural resources.

The government (today’s government and the ANC are 2 different parties, a whole Minister can come up with an economic policy that’s his and not from his party) is employing DA’s approach to the economy. DA’s approach in Tshwane was to cut-off on spending, deliberately suffocate the economy and ultimately shift spending to were their parties of interest reside. A tactic used is to create crises all over the place as an excuse to undertake some spending.

The government of today is very comfortable and is aware of what it’s doing.

We are being played.IMO.

Dear People of South Africa – the bad news is that there is no good news. SA has been looted into virtual bankruptcy – this will continue so expect tax hikes. I personally believe in e-trolls even if it does not impact me directly as I drive a nice flashy Tax payer sponsored car – sorry if the cost of your next car has been capped at R700k – times are very hard indeed. Stay tuned for my recipe for disaster pudding – it’s a really great way to eand a country….sorry, I meant meal… regards, Tito.

poor commies in government…cant spend more than R700k on a car…shame

Maybe they could revive Armscor by driving around in APCs.

Virtual bankruptcy? The country is bankrupt. For now it’s smoke and mirrors. In ten years it will be more obvious.

And people get upset with me when I say the IMF IS coming, jut a matter of when.
Which will be a good thing contrary to popular opinion.

As expected. A total nothing burger

Escom will receive their outstanding debt from local municipalities, like every actually via treasury, which is actually another bailout to Escom, they just don’t call it a bailout.
Debt will increase with 50% in 3 years, what a disaster is waiting for South Africa!!!!

The only possible positive about this:
”Government will take a step back, allowing Eskom’s management to fix the utility”
is if new Eskom management – without political interference – yeah right – remedy the inefficiencies even that means job cuts – yeah right.

Eskom’s management ? Oh, you mean NUMSA.

The most encouraging part of this article is that the headline matches the picture.

lol

I am so happy that we have pull the plug 18 months ago by moving out off that disaster zone. I am also grateful that we have save our money and not spending it on wasteful entertainment and motorcars contrary to all those who spend money to beat the inflation monster. What a misnomer. Good luck to all you non-savers.

I hope you moved to a non English- speaking country. And good luck!

Indeed, we did move to a non-English speaking country. We enjoy on average 300 full days of sunshine (thus pay very little towards heating in winter) per year, eat everything and more to what we were accustomed too in SA at the same cost per month, we are now part of the state medical scheme (covers 60 – 65% of our medical expenses) free of charge, our chronicle medicine is always available, we pay our taxes without complaining because we are seeing and experiencing the benefits, have access to 25 other countries and cultures without a passport or visa and sleeps all year round without locking our front door. Overall, we feel welcome and safe in our new home and country. Paradis!

“Render under Caesar what belongs to Caesar or Caesar has a tendency to break your bones”. Mboweni has the intellect of a deck chair. His remark sound like a threat.

We all know what happened to Caesar…

We are Royally Boned…

South Africa will not collapse because there are enough good people of all races and political parties who still believe in a better South Africa for all. Do not comment on the politicians as they have to satisfy their voters and they might have more issues to deal with than what we are aware of. Do you positive bit and start with your own family by cutting down on expenditure and grow your business with innovative ideas applied locally and abroad.
We have so much to be thankful for.I was in JHB recently and I enjoyed a world class experience to ride on the Gautrain and I saw all the modern and beautiful business buildings.
Finally the magic word is respect. Respect one another and our leaders and our country.

Herman, while I agree with you that there are many wonderful people in SA, that will have little or no impact on the looming economic disaster. I just had the privilige to visit Greece with a Greek friend of mine, staying with his family. I have never met such wonderfully friendly people with a deep love of their country and its traditions. However they still had their salaries and pensions HALVED due to the unsustainable debt burden its leaders placed Greece under. While it is of course not your intention I think views like yours are doing more harm than good.

Respect is earned! I might respect the position/rank but not the people/system/illegal actions etc,..!

Big budget in a nutshell: There is no nut. It is mathematically impossible for SA to survive financially.

He said the Aloe will be thriving by February. Is he mad or stupid?

End of comments.

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