Finance minister Enoch Godongwana will deliver his maiden Medium Term Budget Policy Statement (MTBPS) at 14h00 on Thursday (11 November).
The MTBPS can be viewed through several channels, including TV services like DStv, news channels, and live-streaming sources like YouTube.
You can watch the Budget Speech from the following sources:
What to expect from the Budget Speech
Godongwana is largely expected to continue on his predecessor Tito Mboweni’s path towards fiscal consolidation and growth stimulation.
Investec chief economist Annabel Bishop said that the focus of markets and credit rating agencies will primarily be on fiscal metrics and whether or not the rand value of borrowings and deficits rise.
“We expect gross loan debt will come out at 70% of GDP for 2020/21, versus the 80.3% of GDP projection in February 2021 Budget. The latter preceded recent revisions to GDP numbers, and the declining ratio was due largely to this, rather than any major drop in borrowings.
“For the current fiscal year, we expect a debt:GDP projection of 69.8% of GDP – 2021 Budget prediction was 81.9% – both on the substantial growth and upwards revision in nominal GDP, with the upwards revision to the size of the economy itself creating a larger base to grow off.”
Citadel chief economist, Maarten Ackerman also does not foresee Godongwana making any big changes to existing budget policies.
“Looking at where we are right now, we don’t really see big announcements regarding tax changes or any other policy changes, so it’s likely to be more of an update, and an indication of what we can expect when the National Budget Speech is delivered in February,” he said.
Ackerman said that the South African economy has rebounded more positively over the past year than had been expected, or budgeted in the February National Budget, partly thanks to the reopening of the global economy supporting strong exports from the local commodities and agricultural sectors.
“This doesn’t mean that we are out of the woods yet, it just appears far better in comparison to the worst of the pandemic.
“What one hopes to see is whether the minister is going to be prudent and use this opportunity to ‘bank’ some of the benefits that we’ve seen, because we are still in a very tight fiscal position and, if we don’t get the economy going very soon, we might have some further fiscal challenges in the next two to three years,” he said.
Basic Income Grant
Analysts expect further clarity around the R350 social distress grant, which is expected to be replaced by a form of basic income grant (BIG).
Reports indicate that the R350 grant could be terminated and replaced with a ‘family grant’ which would only be given to the head of a family household instead of individuals.
While economists agree that Godongwana is unlikely to announce any tax hikes and adjustments, the MTBPS should provide some direction as to whether we will see any new taxes come February 2022.
“Minister Godongwana has previously indicated that he is not a proponent of increased taxes to fund expenditure. He is on record at a recent ANC policy meeting where he expressed the views that South Africa cannot tax its way out of an economic crisis and pointed out that the recent tax increases did not yield substantial additional revenue,” said Nazrien Kader, Old Mutual Group’s head of tax.
“It has also been widely reported that there has been an accelerated exodus of so-called high net worth individuals out of South Africa in recent times, with one of the reasons being South Africa’s currently high tax rates for individuals and a threat of future increases, without the trend abating.”
Analysts are also hopeful that Godongwana pushes forward on the government’s plans to reduce red tape.
Angelika Goliger, EY Africa’s chief economist, said that while the impact of individual regulations may not be sufficiently headline-grabbing, easing them could serve to improve business substantially.
“In fact, they could actually result in net savings to the fiscus in many instances,” Goliger said.
“The best-known example here is the scrapping of the requirement to renew your driver’s license every five years. There are many other such types of quick-wins possible across various industries.”
Transport minister Fikile Mbalula has also indicated that the government should provide clarity on Gauteng’s controversial e-toll scheme as part of the MTBPS.