The Treasury will ask parliament to postpone the unveiling of the medium-term budget policy statement (MTBPS) by a week to allow officials breathing space after next week’s local government elections.
Finance minister Enoch Godongwana will now present his debut policy statement on November 11, officials confirmed to Business Day on Monday. A request has been sent to parliament for a change of date.
The MTBPS plays a critical role in the overall budget process and provides the country and its elected representatives with an update on the Treasury’s economic forecasts, adjusts the budgets of government departments and makes emergency changes to spending.
Godongwana’s policy statement is eagerly anticipated by financial markets, coming about three months after he replaced Tito Mboweni during a cabinet reshuffle in August.
It also comes as the government is increasingly under pressure from elements in the ANC alliance to use extra fiscal room created by an unexpected surge in commodity exports to increase social spending. These calls may get louder if the ANC fails to regain control of major metros which it lost in 2016.
Optimistic
In 2020, Mboweni delayed the MTBPS, which is usually delivered in October, citing "complex and unusual circumstances visited upon us by the Covid-19 pandemic". Due to the pandemic and resulting lockdown, he had unveiled a supplementary budget in June 2020.
Economists are optimistic that when Godongwana presents the MTBPS, he will reveal a much rosier picture than was contained in Mboweni’s budget in February.
BNP Paribas senior SA economist Jeffrey Schultz said in a note on Monday that revenue could overshoot the government’s previous estimate by about R160bn.
"With municipal elections scheduled for November 1 and polling results likely around the time of the MTBPS just three days later, we believe that markets are likely to take a particular interest around any medium-term expenditure adjustments, particularly should the ruling ANC continue to lose popularity at the polls," he said in the research note, which was written before the Treasury confirmed the delay.
The French bank expects a "well-balanced budget", with Godongwana "likely to advocate faster structural growth reforms rather than be tempted towards unsustainably large, populist spending plans", Schultz wrote.
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