THE CEO INITIATIVE CITING CO-CONVENER JABU MABUZA
THE CEO Initiative welcomed the government’s commitment to avoid raising additional revenues through increases to tax instruments alongside a focus on driving efficiencies in revenue collection.
“The signs of turnaround and progress – albeit often small and off a low base – in the efforts to reform the country’s key state-owned enterprises (SOEs) are promising, as this leads to better services for the most vulnerable in the economy.” Mabuza said.
He said they reiterated that any additional funding allocated to SOEs – including SAA – had to be done in a way that ensures fiscal discipline.
PWC STRATEGY & ECONOMISTS: LULLU KRUGEL, CHRISTIE VILJOEN & MAURA FEDDERSEN
Despite revenue pressures, the MTBPS reaffirmed the government’s commitment to maintaining its expenditure ceilings and to achieving debt stabilisation.
It is certainly good news that Treasury is committed to avoid tax increases and speaks to the confidence government has in the ability of various summits and stimulus plans to revitalise the local economy.
Disappointingly, the MTBPS made no reference to any steps that would address record high fuel prices apart from a pledge that taxes and levies in general will not rise by more than inflation going forward.
Ratings agencies will likely look out for three priority areas that can trigger changes to the country’s sovereign credit rating.
These are the pace of fiscal consolidation, reforms in state-owned enterprises (SOEs) and measures to lift economic growth.
Based on these three factors, rating agencies will probably not be too enthusiastic about the MTBPS as it does not suggest any improvement in sovereign creditworthiness.
ABSA ECONOMISTS PETER WORTHINGTON AND MIYELANI MALULEKE
Overall, we think the market could be disappointed by the MTBPS, which pencils in wider-than-expected Budget deficits over the three-year planning horizon, and consequently defers the promised stabilisation of the government’s debt to gross domestic product ratio.
However, at least some of this wide deficit trajectory owes to a policy decision to clear a backlog of VAT returns.
We think Mboweni’s speech (as opposed to the MTBPS document itself) took a much tougher tone on various on SA’s fiscal challenges.
This suggests that Mboweni might push for a tougher fiscal stance in the 2019 Budget in February, especially if growth shows some rebound by then.
The slippage on the revenue target is bigger than expected, in part because of a policy decision to accelerate VAT refunds.
Thus, a big part of the shortfall is actually a policy decision to improve VAT administration, with the Treasury now committing to pay all VAT refunds within 21 days. This is good news for the economy in general, even if not for the fiscus.
PAM GOLDING
LEADING estate agency Pam Golding Properties has welcomed the announcement of R1 billion in housing subsidies to help low to middle income households gain access to affordable home loans.
Pam Golding Properties chief executive Dr Andrew Golding said also positive in Mboweni’s mini-Budget was the R669 million to be invested over the medium term to revitalise the government-owned industrial parks in township areas.