Enoch’s notebook – Background to and strategic intent of the 2022 MTPBS

  • ‘Determined and disciplined’ budgeting supported by high commodity prices have combined to narrow the Budget Deficit.
  • Debt burden has increased from R577bn in 2008 to over R4 trillion in 2022 – an increase of 5-fold in 16 years.
  • By 2024 revenue will exceed non-interest spending for the first time in 15 years – ie SA will be in a position to start repaying debt for the first time in a decade and a half.
  •  Net government debt will stabilise at 69% of GDP in 2025.

This will enable government to begin rebuilding fiscal space and renew real spending growth in key areas to support the economy.

  • Targeted areas are the number of teachers and police; retaining health workers; improving critical water, roads and rail infrastructure, unblocking some of the bottlenecks restricting economic activity – complemented by stable public finances that promote higher investment.

SA’s economic growth rate must be lifted through rapid and decisive reforms.

  • Govt’s structural reforms are focused on increasing electricity production and removing associated regulatory constraints; building confidence to support increased private investment in infrastructure; creating conditions in which businesses can flourish and create many more jobs.
  • Over the medium term govt will also strengthen the capacity of the state – this includes funding investigative and prosecutorial agencies to root out corruption and bolster financial management in municipalities.

Funds from higher than expected revenues will be set aside to reduce the gross borrowing requirement. This year a portion of this will be used to support Denel, SANRAL and Transnet.

Government will also take over a portion of Eskom’s R400bn debt, enabling the utility to restructure. Eskom is the biggest known risk to the economy and public finances. A lower debt burden will enable Eskom to implement a viable unbundling process and make resources available for investment in the critical electricity supply and transmission structure.

For more MTBPS insight be sure to join Alec this evening at 7pm. You just need to register for the webinar here – https://attendee.gotowebinar.com/register/2749266579740443662

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