BusinessLIVE will host a Twitter Space live debate on Thursday ahead of next week’s medium-term budget to discuss what lies ahead as the government gears up to lay out a three-year plan to spend your tax money.
The panellists will include Michael Sachs, former budget office head at the National Treasury, Alexforbes executive chief economist Isaah Mhlanga, Cosatu’s head of policy Lebogang Mulaisi and Business Day editor-at-large Hilary Joffe. Khaya Sithole, a chartered accountant and academic, will moderate the discussions.
The 2022 medium-term budget policy statement (MTBPS) on October 26 is forecast to have a main budget deficit outcome for the current fiscal year of R317bn (4.7% of GDP), due mainly to improved revenue collections, despite slightly higher projections for public sector compensation.
As it stands, the MTBPS is expected to pencil in a pay deal of 3% on top of the 1.5% notch progression and the R1,000/month posttax cash gratuity, even though not all unions have agreed to it.
There is also an expectation the MTBPS will provide the broad outlines of the government’s approach to the long-awaited Eskom debt deal, and also likely indicate the government’s intentions for the Social Relief of Distress (SRD) grant, which is scheduled to expire at the end of the current fiscal year.
Transnet has also recently indicated its preference for a degree of state funding, and finance minister Enoch Godongwana has previously indicated to Business Day that he will say something about Transnet in the budget statement.
Critics of the National Treasury say SA’s macroeconomic framework has adopted a highly restrictive path, with the role of fiscal policy being narrowly conceived to maintain low tax and debt levels and achieve “macroeconomic stability”.
They say the Treasury claims that the higher debt will “crowd out” private sector investment and lobby that the country’s fiscal framework need be reorientated to tackle unemployment, poverty and inequality as part of a pro-employment macroeconomic framework instead of a narrow debt stabilisation focus.
But can SA afford higher debt, and what would this mean for the country’s fiscal consolidation efforts?
The latest National Treasury’s budget data showed that revenue exceeded February’s outlook.
Estimates show that an overrun, due to an improvement in personal income tax receipts, of about R110bn can be expected. This improvement follows the commodities boom-driven revenue performance announced in the 2022 budget where there was a R181.9bn overrun.
Will considerations about the SRD and the Eskom debt deal have an effect on this year’s fiscal outcome — and with fiscal data already showing an acceleration of spending on compensation, what impact will this have on the Treasury’s fiscal consolidation strategy?
Join BusinessLIVE’s pre-budget debate this Thursday, October 20, at 7pm.
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