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BLOG: Rand firms on positive notes in Enoch Godongwana’s first Medium-Term Budget Policy Statement

Finance Minister Enoch Godongwana delivers his maiden Medium Term Budget Speech in Parliament. Photo: Phando Jikelo/African News Agency(ANA)

Finance Minister Enoch Godongwana delivers his maiden Medium Term Budget Speech in Parliament. Photo: Phando Jikelo/African News Agency(ANA)

Published Nov 12, 2021

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MARKETS read some positives in Finance Minister Enoch Godongwana's maiden Medium Term Budget Policy Statement (MTBPS) with the rand firming more than 1.5 percent to R15.24 per dollar late yesterday afternoon.

This is as economists pointed out that the sheer quantum of debt however is still projected to climb further, with 2024/25s R5.5 trillion double 2018/19s R2.8trn, while the country's credit risk, which is the perceived risk of default, has slightly moderated.

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This is what you need to know about Enoch Godongwana’s pro-poor Budget

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Cape Town - Finance Minister Enoch Godongwana says he was striking a balancing act in his Medium Term Budget Policy Statement as the fiscus was facing spending pressures.

He said this was a pro-poor budget with 60% of it going to the social wage.

But loadshedding was a threat to the economy and government would have to ramp up its plan to diversify energy supply to secure more sources of energy.

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Business Unity SA congratulates Godongwana on his first Medium-Term Budget Policy Statement

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BUSINESS Unity SA has congratulated Finance Minister Enoch Godongwana on his maiden Medium-Term Budget Policy Statement which he delivered on Thursday.

In a statement, Busa said Godongwana has been consistent, since his appointment, of the need to be prudent in the current climate.

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Enoch Godongwana undertakes to engage unions on public sector wage bill

Cape Town - Finance Minister Enoch Godongwana said on Thursday there would be an engagement with the labour movement on the salary wage bill.

“As far as we are concerned there is to be engagement with unions. There is no doubt about it. The question is the content and nature, but I can’t say it now,” Godongwana said.

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No major surprises on the 25th Medium-Term Budget Policy Statement: Economist

There were no major negative surprises on the Medium-Term Budget Policy Statement as several issues were left to provide further detail on in the February 2022 National Budget. This is according to Momentum Investments economist Sanisha Packirisamy.

Finance Minister Enoch Godongwana tabled the 25th Medium-Term Budget Policy Statement on Thursday, where he emphasised the budget’s focus on navigating the country’s path toward economic and social recovery.

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A rand-denominated Islamic bond on the cards, says says Enoch Godongwana

The National Treasury will still launch a rand-denominated Islamic bond in 2021/22 as a way of diversifying the debt portfolio and introducing a new set of savers into its funding universe. This was confirmed at the media briefing on the Medium Term Budget Policy Statement (MTBPS).

It had previously issued a US$500 million Sukuk bond in 2014, when it became the first African nation to issue a sovereign Shariah-compliant bond. At the time, it received subscriptions worth US$2.2 billion and it will be hoping for a similar over-subscription when it launches its rand-denominated bond.

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Government committed to Just Energy Transition for SA's electricity sector, says Enoch Godongwana

New Finance Minister Enoch Godongwana acknowledged that the government had spent the past 13 years trying to fix the problem at state-owned electricity utility Eskom rather than trying to create additional electricity generation capacity.

He said that the government has already made significant progress in correcting this by amending Schedule 2 of the Electricity Regulation Act of 2006, which raised the licensing threshold for private sector power providers from 1 megawatt (MW) to 100 MW. It has also made it possible for private power generators to sell directly to customers, which should alleviate the risk of load shedding. Load shedding this year has already exceeded 1,000 hours.

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Enoch Godongwana on extension of R350 grant in MTBPS: Decision lies with Cabinet

Cape Town – Finance Minister Enoch Godongwana says it is up to Cabinet to decide on whether to extend the R350 social grant for unemployment after March 2022.

He said this was not the decision of the National Treasury alone.

President Cyril Ramaphosa had announced the extension of the R350 grant a few months ago until March next year when the current fiscal year comes to an end.

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The country's infrastructure spend will require participation from the private sector

Between 1998/99 and 2017/18, the public sector spent R3 trillion on infrastructure, but in the lack of fiscal space means that in future a substantial portion of infrastructure spending will have to be provided for by the private sector.

That is why the government undertook a review of the public-private partnership regulations, which was completed in May 2021.

Its recommendations include simplifying the regulations, eliminating delays in approval and implementation, and standardising project preparation; and building capacity at all levels of government will be implemented from early 2022.

Public sector infrastructure spending increased from R48.8 billion in 1998/99 to R236.2 billion in 2017/18. In real terms, infrastructure spending grew by an annual average of 4.3%.

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Enoch Godongwana says load shedding is having a serious impact on the economy

Finance Minister Enoch Godongwana has not given a bailout to Eskom as the country continues to grapple with load shedding.

Godongwana told Parliament, during the Medium Term Budget Policy Statement on Thursday, that the country needed stable energy supply.

He said load shedding was having a serious impact on the economy.

Businesses have complained of losing billions of rands.

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National Treasury will reduce debt issuance relative to 2020/21 outcome due to better than expected revenue

Better than expected revenue has allowed the Treasury to reduce expected debt issuance relative to the 2020/21 outcome.

The main difference between the February 2020 Budget and the November 2021 Medium Term Budget Policy Statement (MTBPS) is that net domestic short-term debt issuance has been drastically reduced. No net issuance of Treasury bills is expected in fiscal 2021/22 compared with the 2020/21 outcome issuance of a net R95.3 billion.

In future years, net domestic short-term debt issuance averages just above R50 billion, with R54 billion forecast for 2022/23, R53 billion in 2023/24 and R52 billion in 2024/25.

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Treasury revises the country’s GDP to show 5.1% growth in 2021

The Treasury has revised its forecast of growth in the South African economy in 2021 to 5.1% from the 3.3% forecast in the February 2021 Budget. It also reduced the impact of the Covid-19 pandemic on the economy in 2020 to a 6.4% contraction from the 7.2% reduction forecast in the February 2021 Budget and the 7.8% decline forecast in October 2020 Medium Term Budget Policy Statement (MTBPS).

It, however, expects a quarterly contraction in the third quarter of 2021 due to the unrest in July in Gauteng and KwaZulu-Natal and the cyber-attack on state logistics firm Transnet.

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Treasury revises the country’s GDP to show 5.1% growth in 2021

The Treasury has revised its forecast of growth in the South African economy in 2021 to 5.1% from the 3.3% forecast in the February 2021 Budget. It also reduced the impact of the Covid-19 pandemic on the economy in 2020 to a 6.4% contraction from the 7.2% reduction forecast in the February 2021 Budget and the 7.8% decline forecast in October 2020 Medium Term Budget Policy Statement (MTBPS).

It, however, expects a quarterly contraction in the third quarter of 2021 due to the unrest in July in Gauteng and KwaZulu-Natal and the cyber-attack on state logistics firm Transnet.

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Debt to GDP ratio to stabilise below 80% compared with projections in the October 2020 medium-term budget policy statement

The November 2021 Medium Term Budget Policy Statement (MTBPS) aims to stabilise the debt to GDP ratio below 80% compared with projections in the October 2020 MTBPS that saw the ratio rise to 95.3% in 2025/6.

The projections are, however, far worse than the February 2019 Budget projection of stabilising the ratio near 60% as the projection then was a peak of 60.2% of GDP in 2023/24.

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November Medium Term Budget paints rosier picture than February 2021 Budget

November Medium Term Budget paints rosier picture than February 2021 BudgetThe November 2021 Medium Term Budget Policy Statement (MTBPS) painted a rosier picture than either the February 2021 Budget and the October 2020 Medium Term Budget Policy Statement (MTBPS) as revenue growth has been stronger than expected, in part due to higher commodity prices recently, while the benchmarking exercise by Statistics South Africa (Stats SA) lifted the 2020 Gross Domestic Product (GDP) level by 11% which improved the fiscal deficit and gross government debt to GDP rations.

This meant that the contraction in 2020 has been revised to 6.4% from February’s 7.2% and October’s 7.8%, while the higher revenue in 2020/21 means that tax revenue projections are higher by R120.3 billion than forecast in February, although some private sector economists such as those from Nedbank expect the over-run to be as much as R150 billion.

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LIVE FEED: Finance minister Enoch Godongwana tables his ’mini-budget’

Finance minister Enoch Godongwana tables his maiden Medium-Term Budget Policy Statement (MTBPS) on Thursday afternoon with investors and a blackout weary nation eager to see how he navigates South Africa out of the economic quagmire it finds itself in.

Watch the live feed here.

Cane growers call on Enoch Godongwana to scrap sugar tax when delivering his first Medium-Term Budget Policy Statement

As Finance Minister Enoch Godongwana delivers his Medium-Term Budget Policy Statement (MTBPS), the SA Canegrowers has called on him to scrap the Health Promotion Levy (HPL), or sugar tax, to ensure that the sector’s masterplan succeeds.

SA Canegrowers chairperson Andrew Russell said Godongwana would be delivering his MTPBS in the context of record levels of unemployment in the country.

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Small and medium businesses could do with infrastructure spending boost in the mid-term budget

Finance Minister Enoch Godongwana can unlock significant opportunities for small and medium businesses (SMEs) in the Medium-Term Budget Policy Statement through infrastructure driven growth.

The SME sector’s optimism hangs on the extent of the government’s review of the public finance regulatory framework to boost infrastructure investment in the short term.

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