Roodt predicts 'cautiously positive’ mini-budget
Chief Economist at the Efficient Group, Dawie Roodt, says South Africans should not expect major surprises when Finance Minister Enoch Godongwana delivers the Medium-Term Budget Policy Statement (MTBPS) on Wednesday afternoon.
Roodt says the MTBPS is not a full budget but rather a review of the country’s fiscal position and economic outlook.
"We have to understand first of all that this is not a budget. This is just a medium-term budget policy statement — an opportunity for the Minister of Finance to get feedback on the state of the economy and the state of the state’s finances. Don’t expect major changes on taxes or expenditure."
He expects Godongwana to deliver a cautiously positive message, possibly announcing a lower inflation target of around three percent, which Roodt says would be a good sign for monetary stability.
However, he believes the economic growth forecast will be revised downward, reflecting weaker prospects than initially projected.
"The minister’s growth outlook is likely to be a little bit weaker than previously thought. But despite that, state revenue or tax collections are actually doing quite well — thanks to an aggressive SARS."
Roodt says stronger revenue collection means the fiscal deficit and debt levels may look slightly better, potentially improving South Africa’s credit rating outlook.
"That in itself could eventually lead to an upgrade in terms of the rating of South Africa."
On trade and the rand, Roodt says any positive market reaction will likely be limited.
"It’s possible that today’s announcements could strengthen the rand, but I don’t think this is the platform where the Minister will make announcements regarding trade."
The Finance Minister will present the MTBPS in the National Assembly on Wednesday afternoon, outlining government’s spending priorities and fiscal strategy for the next three years.
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