Finance minister Tito Mboweni. Picture: SUNDAY TIMES/ESA ALEXANDER
Finance minister Tito Mboweni. Picture: SUNDAY TIMES/ESA ALEXANDER

In this edition of Business Day Spotlight, we look at the medium-term budget policy statement (MTPS) given by finance minister Tito Mboweni earlier in the week. 

Our host Mudiwa Gavaza is joined by Nicky Weimar, chief economist at Nedbank, and Annabel Bishop, chief economist at Investec, to discuss the issues.  

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We start by talking to Weimar, who says the biggest disappointment is likely the increased level of government borrowing, which raises public debt. Plans to rein this in have been delayed, which makes sense given the economic environment, but still presents a burden for the country. 

Weimar highlights that uncertainty around the pandemic is likely to make implementation of the government’s plan more difficult. She also talks about the impact of the speech on bond markets. 

Business Day Spotlight host Mudiwa Gavaza. Picture: DOROTHY KGOSI.
Business Day Spotlight host Mudiwa Gavaza. Picture: DOROTHY KGOSI.

We then talk to Bishop who highlights some of the missing pieces of the medium-term budget that may have been expected, especially around state-owned entities (SOEs), the biggest being Eskom. She says the MTBPS normally doesn’t present that much detail, though many would have liked to know how the state plans to manage the debt of these entities. 

Bishop details progress being made on the economic recovery plan. She says the fourth quarter is unlikely to see as strong a rebound as the third due to the depressed level of activity at the moment. Looking to the full budget early in 2021, Bishop says consumers and businesses will likely be on the look out for how the state plans to raise taxes, as indicated by the Treasury. 

Both economists say one of the biggest risks to SA’s economy in the coming months is the increased rate of Covid-19 infection in other parts of the world, particularly the US and Europe. As an open economy, SA is often susceptible to international shocks and market movements.

The discussion also touches on the bond markets, implementation risk, the effects of the global economy, the drag of hospitality and tourism on the economy when not in operation, and how the medium-term budget has influenced forecasts for GDP. 

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 Business Day Spotlight is a MultimediaLIVE production.

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