Cape Town - A solution to Eskom’s debt burden, the Basic Income Grant, the rising cost of living and public sector wage bill are some of the priorities experts and trade unions hope will dominate Finance Minister Enoch Godongwana’s Medium Term Budget Policy Statement (MTBPS) on Wednesday.
The much anticipated MTBPS, which plays a critical role in the overall budget process as it sets out the policy framework for the upcoming Budget and provides the country with an update on the National Treasury's assessment of the current economic climate, is also expected to draw social movements and grassroots organisations from various communities who will gather in the city centre to highlight what they want to be included in the Budget.
Godongwana is also under pressure from public sector unions who are geared to embark on industrial action after the government’s “failure” to conclude an agreement on protracted salary negotiations for the Public Service. He will deliver his address on the back of a Transnet strike which threatened to cripple the country’s ailing economy, costing billions of rand in its 11 days before the employer and the unions struck a deal.
But the government does not appear to be out of the woods yet, with Public Servants Association (PSA) spokesperson Reuben Maleka saying priorities should remain improving public service workers’ conditions of service, which includes salary increases in order to cope with high cost of food, petrol, transport and other consumables.
“The Budget should also address filling of vacancies to ensure enough personnel to serve the public. There is also a high number of government buildings and offices that need urgent maintenance and infrastructure budget should be a priority,” said Maleka.
Bureau for Economic Research chief economist Hugo Pienaar said the extreme global and domestic macro-economic volatility in recent years has resulted in large adjustments to the outlook for public finances from one fiscal statement to the next, and Wednesday’s MTBPS was likely to follow this trend.
“Treasury’s updated projection for tax revenue in 2022/23 will be a key focus of the MTBPS, as well as the revised medium-term revenue outlook. As we have written before, tax revenue in 2022/23 could exceed the outlook provided in February by more than R110bn (1.5% of nominal GDP). The Treasury is set to pencil in more for the public sector wage bill (PSWB) after the government upped its salary increase offer to 3% (according to the Department of Public Services and Administration, the total offer is significantly more).
While this is a soft estimation, the revised outlay on the consolidated wage bill could be R20bn+ more for 2022/23 than envisaged in February,” said Pienaar.
He said expenditure revisions were also likely for the later years of the fiscal framework. These could include more funds for non-Eskom state-owned enterprises (SOEs), including Transnet.
According to Pienaar, another major issue on the expenditure front was whether the Treasury provided for an extension of the R350 per month social relief of distress (SRD) grant and, if so, whether there are implicit tax increases provided in the fiscal framework to finance this.
Waldo Marcus, of TPN Credit Bureau, said what both the economy and the property sector urgently needed was the assurance that the government had a handle on ballooning debt, and was spending responsibly in a way that encouraged investment and economic growth.
“The state-owned logistics provider’s inefficient and in some cases collapsing infrastructure has been well documented in recent weeks.
“A lack of investment, combined with dragged-out labour action, is costing the economy both directly in terms of taxes and lost revenue, as well as indirectly by holding an already fragile economy hostage through labour negotiations.
“Encouragingly, inflation looks to be abating.
“Headline annual inflation decreased to 7.5% in September from 7.6% in August. Although this is still early days in the turnaround it will hopefully signal a less aggressive interest rate hike cycle, offering welcome relief to financially constrained consumers that can ill-afford further interest-rate hikes.
“Higher interest rates and poor economic growth is a significant cause for concern, particularly if this plays out in the form of business closures and further job losses which will impact the ability of tenants to pay rent,” he said.
Energy expert Lungile Mashele said she was hoping to hear a pronouncement on the Eskom debt matter, claiming it was hindering any meaningful resolution to the load shedding crisis.
“Eskom is unable to carry out the necessary maintenance and refurbishment it so desperately requires because it does not have money,” she said.
Cape Times