What to expect from South Africa’s Medium-Term Budget Statement

Very important, this speech from the Finance Minister.

John Lewis is an independent economist joining me on the line now.

John, the President, Sul Ramaposa, was on an electioneering walkabout.

I think he was here in Cape Town over the weekend when he hinted that there might be some statements made by the Finance Minister that will enjoy some relief for us as far as the fuel pumps is concerned.

Does he have any room to manoeuvre?

He probably has some short-term room to maneuver because there have been some tax overruns, notably mining taxes.

Mining production up until a number of months ago enjoyed a very good period.

So we're talking about possibly up as much as 50 billion rands of tax overruns.

Obviously, one would like to see more expenditure underruns than tax windfalls because as fast as tax windfalls come, they can disappear.

But I guess it does, while that is the case, you can see the budget being still adhered to while there could be some relief, some mild relief in terms of fuel levies.

It is possible.

And in an electioneering cycle as we are in, I think that's a possibility.

Ultimately, what we are all looking for are any structural reforms that the Finance Minister can announce to effectively unlock opportunities, right? Because we all agree that growing at less than 1% on an annual basis is doing nothing to address these socio-economic challenges we are facing in this country.

Well, yes, I mean, structural reforms, they're not necessarily the domain of the Finance Minister.

They can be from other departments too, but But yes, what you typically want to see.

Now, we've still got this very tight budget.

When you've got revenue overruns that are windfalls, that's a temporary bit of good news and you can possibly keep the debt to GDP ratio coming down.

And that's the most important thing for the finance minister to do at the moment is to reduce that debt to GDP burden.

especially given that costs of borrowing globally are off their lows.

There's concerns in the bond markets with long-term inflation, with high levels of government debt worldwide.

So it's important now.

So what we need to do in terms of structural reforms is somehow take a lot of the pressures off the fiscus by opening up the economy or certain parts of the economy more to the private sector and let the private sector get along with fixed investment which is in such short supply at the moment from government side and whether it's invest in railway rolling stock and concessions on railways, harbours, independent power producing and so on, that's where you want to see the positive announcements allowing the private sector to do more of the work and more of the investment in a well regulated environment and taking the pressure off government because the budget is so limited at the moment.

What are you looking forward to, John? What do you think the minister is likely to say and what would you wish him to say that will make us all happy?

Well, I would wish, I think I've just sort of intimated what I'd wish him to say is, you know, announcing new structural reforms, speeding up structural reforms, but that's not necessarily the minister of finance, you know, that can be other ministers or the president, you know, it's other departments that are involved.

With regard to the budget...