Familiar balancing act facing Godongwana on Wednesday, warns economist
Chief economist at Econometrix Azar Jammine says Finance Minister Enoch Godongwana will once again have to pull a rabbit out of a hat when he tables the budget amid an unprecedented energy crisis.
Godongwana is expected to deliver his budget speech in Parliament on Wednesday.
The speech comes amid sluggish economic growth, rising cost of living and continuous load shedding.
Jammine says government will have to reprioritise some of the existing expenditure.
"One of the dominant themes will be unexpected overruns in government revenues in the last two years, arising out of the rise in global commodity prices and benefits that mining companies have had that has boosted their profits and taxes they have paid is unlikely to last, and furthermore the increased intensity of load shedding is likely to reduce economic growth.”
Jammine says the extension of the social distress grant will cost government another R33 billion should it decided to raise the grant to R400 or R450.
"They will have to reprioritise some of the existing expenditure to try to cut it down as far as possible. Even with that I think we will end with slight budget deficit, which will make it difficult for ratings agencies about upgrading our credit rating from its current junk status, three levels below investment grade. I don't think Godongwana will get away with it giving the constraints he is facing."
