Here’s what to expect as Enoch Godongwana’s delivers the medium-term budget speech

Finance Minister Enoch Godongwana will present the Medium-Term Budget Policy Statement on Wednesday (26 October) with many parties hoping the speech will build confidence in the struggling economy.

Several bodies expect the speech to address critical factors surrounding fiscal and economic sustainability in South Africa.

ESKOM CRISIS

State owned entity Eskom has been mired in financial crisis for years and has roughly R400bn in debt it cannot afford to service.

The utility has required constant bailouts that have placed public finances under huge strain, with officials struggling to find ways to solve the problem.

An expected announcement may shed light on a long-awaited transfer of a portion of Eskom’s liabilities to the National Treasury, part of an effort to ensure the struggling utility becomes sustainable. Most economists polled by Bloomberg forecast the government will absorb half the burden.

The decision will shape the revised fiscal framework for the next three years that Godongwana will unveil in parliament. At stake is the ability to stabilise debt as spending demands grow at a time when sluggish economic growth and mounting price pressures pose a threat to stability.

“While the transfer of debt from Eskom to the sovereign would result in a further deterioration in fiscal metrics, it could well be the only choice available to shore up the power utility’s finances and the country’s economic prospects,” PwC said in a research note.

GRANTS- INCLUDING BASIC INCOME GRANT

The BER said that a concern on the expenditure front is whether Treasury provides for an extension of the R350 per month social relief of distress (SRD) grant and, if so, whether there are explicit tax increases provided in the fiscal framework to finance this.

Other like Citadel’s Chief Economist, Maarten Ackerman, are keeping an eye out for anything related to a basic income grant.

“In terms of South Africa’s macro-Economic outlook, it’s essential to note that there was yet another revenue windfall in addition to the revenue overruns in recent years. So, we’ll need to see what the finance minister does with that,” Ackerman said.

“We’d like to see the windfalls being used productively- not just on once-off, temporary social spending that does little to nothing to drive economic growth.”

Source: Sowetan Live, Business Tech, Business Day, image from Twitter: @Newsbreak_Lotus

Doctor Mahlaule

Doctor Mahlaule previously worked as a Freelance Journalist at Find-it SA where he was responsible for writing news articles and sharing them on social media platforms. Doctor Mahlaule holds a Diploma in Journalism, BA in Communication Science and a BA Honours in Media Studies. Doctor began his journey as a knowledge Management and Communications Intern at Zenex Foundation. He was responsible for support in event management, social media, website maintenance, writing and brand management. On weekends Doctor attends prison ministry and shares the scriptures with inmates at Krugersdorp prison and plays soccer in the afternoon on some weekends. He has a passion for reading and writing and enjoys going out with friends and socialising in his spare time. He has a one-year-old son and is planning on getting married soon. When asked about what keeps him going, he said: “My family keeps me going. I’m the man I am because I come from a loving home. I have a very supportive family who always encourages me to keep pushing hard.”

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