Finance minister Tito Mboweni will table his medium-term budget policy statement (MTBPS) before parliament on Wednesday (30 October).
The minister’s speech is expected to begin at 14h00, with several streaming options available for South Africans looking to catch the statement live.
The speech will also be broadcast on SABC news channels, ENCA and the Parliamentary Services Channel on channel 408 on DStv.
What to expect
The MTBPS is not a policy statement – it is about fiscal credibility, says Intellidex analyst Peter Attard Montalto, with Mboweni likely to place his focus on the macroeconomic environment, revenue and the scope for expenditure cuts, rather than government policy.
The minister faces a challenging balancing act, having to balance government’s books amid sharp declines in revenue collection, and billions of rand being demanded by the country’s failing state enterprises.
He is also facing an uphill battle in an economy that is struggling to grow at higher than 1% per annum, while the country fights record-high unemployment levels, households under pressure, and shaky business confidence.
The budget deficit is widening, the South African Revenue Service (SARS) is struggling to collect taxes, and the threat of a ratings cut by Moody’s – sending South Africa into full sub-investment grade – all add to the current gloom.
South Africa currently has a revenue hole of around R60 billion, according to Attard Montalto. As the MTBPS is an expenditure-focused document, there is unlikely to be any policy reaction to this.
However, Mboweni might allude to or hint at tax increases that could show up in 2020.
The main focus of the MTBPS will be on expenditure, with particular focus on things like the special appropriations bill tied to Eskom, along with bailouts already budgeted for the state utility.
Mboweni is expected to lay out government’s plans to cut spending, but this is in a context of there being very little room to do so.
The minister might allude to cutting the government wage bill, but no real action is expected in that area (as it is not politically suitable) – but a form of cost cutting in this space may come from reducing hiring.
Key on the agenda will be power utility Eskom, which is drowning in R450 billion worth of debt and has already been promised over R125 billion in government bailouts. Public enterprises minister Pravin Gordhan on Tuesday laid out a new business plan for the group, but admitted that the situation is dire.
Eskom is the single biggest threat to South Africa’s economy.
It is up to Mboweni to convince investors and ratings agencies that the new plan for Eskom is the winning structure needed to turn the business around, and prevent disaster. This is expected to be a large part of the MTBPS.
It is not only Eskom that the finance minister needs to contend with – many of the country’s state companies face similar problems: South African Airways continues to post losses in the billions, while Denel, the SABC, Prasa, PetroSA, Transnet and Sanral are all in financial crisis.
Announcements on bailouts for these groups is also expected, with analysts predicting that the country’s full contingency reserve of R13 billion will be used this year – around R11 billion of which specifically for bailouts.
While not a policy speech, Mboweni is expected to touch on his economic policy paper published in August, which has gained support in government.
A second version of this paper is expected to be published soon, with the same evidence-based policy direction seen in the first draft.
Mboweni could give a preview of this in his speech, along with how it could possibly boost revenues and stimulate growth.
You can livestream the speech below: