Tito Mboweni. Picture: ESA ALEXANDER
Tito Mboweni. Picture: ESA ALEXANDER

Finance minister Tito Mboweni is presenting the medium-term budget policy statement (MTBPS) in parliament.

It has taken on added significance as economic growth has disappointed and the government has increased spending on parastatals, notably power utility Eskom, while the SA Revenue Service struggles to achieve tax collection targets thanks to poor growth and a legacy of governance problems. 

Mboweni will detail the full effect that the additional R59bn financial support for Eskom, announced in July, will have on the government’s finances, including its borrowing levels. It is anticipated that Mboweni will include more details on how to restructure Eskom’s debt, while the naming of a new CEO for the utility has been promised by the end of October.

Expectations from economists are that fiscal metrics, which are closely watched by ratings agencies and investors to gauge financial sustainability, will have worsened since February.

The government’s deficit is expected to rise to close to 6% of GDP, well above February’s forecast of 4.7%. Government debt to GDP is expected to be upwards of 58%, up from February’s forecast of 56.2%. The Treasury is also expected to revise down its economic growth forecast for the year from 1.5% to somewhere closer to that of the Reserve Bank, which is 0.6%.