Finance Minister Enoch Godongwana will deliver the Medium-Term Budget Policy Statement (MTBPS) at 14h00 later today, 1 November.
According to the Parliamentary Monitoring Group (PMG), numerous stakeholders – political parties, trade unions, businesses, credit rating agencies, investors, and civil society – will be keeping a close eye on Godongwana when he takes the stage at the Cape Town City Hall.
The hotly-anticipated speech will be viewable via several means, including TV services like DStv, news channels and live-streaming sources like YouTube.
You can watch the Budget Speech via the following sources:
Not much expected
Godongwana is in a difficult position, as he has to tackle higher-than-expected expenditures – mainly due to a large 7.5% public sector wage hike – amidst a decline in revenues.
“For 2023/24, we expect a shortfall in taxes of around R47 billion accompanied by a higher expenditure of R56 billion, pushing the deficit to 5.5% of GDP. The outcome is markedly higher than the National Treasury’s target of 4%,” economists at Nedbank said.
“The commodity price upcycle, which led to a windfall in tax revenues last year, has turned sharply, significantly reducing corporate tax collections.”
Although the minister is stuck in a difficult position, with many pundits calling for him to cut expenditure, Ninety One’s Sisamkele Kobus said that it is unlikely that the minister will have any major policy announcements.
“The ministry, together with National Treasury, has been floating some ideas to the cabinet, which have been leaked to the media. These include combining some ministries and departments to save funds,” Kobus said.
“Potential policy changes will, however, probably only be implemented at the Budget in 2024. The MTBPS in November is only likely to reflect a mark to market for the fiscal slippage and not provide a material policy response yet.”
In addition, Momentum Investments warned that too much austerity from the minister could have a serious impact on the stability of the nation.
“With real government spending in per capita terms stagnating over the past decade, proposed austerity measures are likely to weigh more heavily on the fragile social fabric of the country. This risks an elevation in service delivery protests in the medium to longer term, in our opinion,” Momentum said.
PMG noted that Godongwana has already tried to calm the situation, stating that budget cuts are expected to be moderate – with the minister potentially increasing borrowing to cushion the hit of any budget cuts.
The MTBPS will also be accompanied by the introduction of several new bills, including the Taxation Laws Amendment Bill and the Adjustments Appropriation Bill, with it also highly expected that the minister will table the Eskom Debt Relief Amendment Bill.
Keith Naidoo from Momentum said that there is a high likelihood that the government will also need to give bailouts to Eskom and Transnet, especially for the latter due to its poor financial performance
“The market consensus view is for T-bill issuance to play a significant role in financing the larger-than-anticipated budget deficit given the steepness of the yield curve, making T-bills a cheaper funding source relative to fixed-rate, longer-dated government bonds,” Momentum Investments said.