The medium-term budget policy statement (MTBPS) to be delivered on Wednesday will be the main feature of a data-packed week.
Finance minister Tito Mboweni will table it a week later than expected, in part due to the announcement of President Cyril Ramaphosa’s economic reconstruction and recovery plan.
The Treasury is also contending with renewed demands on the fiscus, such as finding R10.5bn for SAA, which cabinet agreed to last month.
Mboweni will have to outline how the fiscus will support the ambitions in Ramaphosa’s recovery plan and still meet commitments made to reduce government spending by an additional R230bn over two years and stabilise SA’s debt levels.
The medium-term budget policy statement is expected to provide an update of SA’s financial metrics, after the June supplementary budget outlined a steep deterioration in government’s fiscal position, as a result of increased spending to pay for SA’s Covid-19 response, and a collapse in revenues due to the economic shock of lockdown.
The Treasury revised its growth forecast in June, pencilling in a contraction of 7.2% for 2020. But this was before data for the second quarter and the worst of lockdown effect was released. The SA Reserve Bank expects growth to shrink a sharper 8.2% this year
From June the consolidated budget deficit was forecast to rise to 15.7% of GDP, up from 6.3% forecast in the February budget, while revenues were expected to come in R304bn short of the forecast in February. The country’s debt levels have soared as a result with debt to GDP expected to surpass 80% by the end of this fiscal year.
With more information now available the medium-term budget policy statement can give a better picture of these numbers with many economists expecting further slippage as SA struggles to contain the Covid-19 fallout.
On Sunday Stats SA announced the delay of the quarterly labour force survey for the third quarter, which had been slated for publication on Tuesday.
This is to allow time for additional data confrontation and the adjustments needed due to constraints in data collection as only households with telephone numbers could be contacted, the agency said.
On Wednesday consumer price inflation (CPI) for September will be released, and producer price inflation is out on Thursday.
After breaching the lower boundary of the Reserve Bank’s 3%-6% target range in May and June, consumer inflation has stayed just above 3% in July and August. Economists expect it to remain subdued, in part thanks to lower fuel prices, with a Bloomberg poll suggesting it will slip to 3%.
On Thursday, private sector credit extension for September will be released. In August it slowed to 3.9%, the lowest rate in a decade despite interest rates at record lows and measures taken by the Reserve Bank to encourage lending through the crisis.
“While there has been an unexpectedly rapid rise in demand for secured credit by households, overall, we expect lenders to have remained cautious amid an uncertain economic outlook,” FNB’s economics unit said in a note.
The country’s September trade balance is due out on Friday. After a previous surplus of R38.9bn, FNB expects SA to record yet another.
Exports should be supported by rising global economic activity, and rallying commodity prices, particularly for platinum group metals and gold, it said, while the import bill will be curtailed by soft oil prices and weak domestic demand.
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