Spending pressure likely to pile up on Godongwana’s budget policy statement
Despite the recent tax windfall being temporary, added spending is ‘being baked into the politics around the fiscal framework’, says Absa
Finance minister Enoch Godongwana’s maiden medium-term budget policy statement (MTBPS) will have to carefully navigate mounting pressure to raise spending on items such as social grants and salaries in the face of a temporary revenue boom that has allayed government’s fiscal woes, if not eradicated them.
This is the view of Absa’s economics unit, led by senior economist Peter Worthington, which is predicting that tax overruns for the 2021/2022 fiscal year could hit R169bn compared to the targets set out in the February budget thanks to a better-than-expected economic recovery and a commodity price boom that has boosted corporate taxes and mining royalties. ..