The world is changing fast and to keep up you need local knowledge with global context.
By Linda van Tilburg
- The week ahead will be dominated by the budget speech by Finance Minister Tito Mboweni on Wednesday. With South Africa’s investment-grade credit rating hanging by a thread, Mboweni will have to convince rating companies and investors that a rescue plan for the debt-ridden Eskom is on track, and that the government is ready to take measures to curb rising debt, narrow the budget deficit and fuel economic growth. Bailouts for state-owned companies including Eskom and South African Airways have pushed up government debt in an economy growing at less than 1% a year, and collecting insufficient revenue. Several analysts have predicted that a tax rise for individuals and companies is in the pipeline, while Absa expected an increase in Value Added Tax. Old Mutual has speculated that a once-off tax, similar to the ‘transition levy of 1995 could be announced.
- With South Africans battling with loadshedding schedules; Finance Minister Tito Mboweni and his team who were preparing this week’s budget review have not been spared. Mboweni told his Twitter followers on Friday evening that ‘as the Core Budget Speech drafting Team was working’ they experienced loadshedding, which meant that they had to adjourn and he described it as ‘So frustrating… but that the sun will rise tomorrow and we shall soldier on”. Meanwhile City Press has reported that Eskom power units could be taken off the grid for 75 days at a time. It is said to be part of a plan to modify the boilers at the Medupi and Kusile power plants in an attempt to reduce exhaust steam temperatures. The project will see the 130 metre tall boilers extended by a further 12.5 metres.
- Statistics South Africa has approached the Treasury again for cash and held talks with Minister in the Presidency Jackson Mthembu, to appeal for funds. The South African Statistics Council has threatened to withdraw over a lack of funds for Stats SA. The Council endorses data released by the service. The agency said its vacancy rate is 20% and some staff were working six or seven days a week, which is reaching crisis point. The Council said Stats SA has received clean audits and it is a respected, reliable and important service but felt that it was punished by government “while those deeply implicated in state capture receive bailouts of massive proportions.”
- Public Works Minister Patricia de Lille announced that her department has released hundreds of parcels of land as part of the government’s commitment to land reform, redistribution and restitution. De Lille said Cabinet approved the release of 167 portions of land held by the department totalling more than 14,000 hectares and a further 684 hectares for human settlement development have since been approved for release. Land transferred must be used for human settlements and is not for resale to the private sector. Land has been released in several provinces including the Northern Cape and in Tshwane, the city said it would be able to build 4,000 houses on land near the city centre that has been released. Land has also been handed over the Cape Peninsula University of Technology which will hand it over for redevelopment of District Six.
- Even without a single confirmed case, sub-Saharan Africa may be the region hardest hit outside of Asia by the spread of the coronavirus. That is according to Bloomberg which reports that the outbreak has shut down entire swathes of the Chinese economy, threatening world economic growth and curbing appetite for oil and metals that are the lifeline of many African nations. African central bankers are starting to sound alarm bells with Namibia, that sells diamonds and copper to China indicating that it was disrupting economic activities. The South African Reserve Bank will take into account the virus impact on the global economy at its next rate-setting meeting, said Chris Loewald, a member of its monetary policy committee. Lobster catchers in the Western Cape are unexpected casualties of the coronavirus with Reuters reporting that catchers could earn R340 per kg for live lobster but the price has dropped to R120 per kg because China halted seafood imports.
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