Midterm Budget: Economists warn of possible unrest
Economists do not expect Finance Minister Enoch Godongwana to make any announcements on the SRD R350 grant during his midterm budget speech.
Finance Minister Enoch Godongwana is expected to deliver the Midterm Budget Policy Statement(MTBPS) later today. Economists have warned that any proposed budget cuts or tax increases could prompt service delivery protests.
WHY IS MIDTERM BUDGET IMPORTANT
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According to Parliamentary Monitory Group, the MTBPS ‘allows for government departments to apply for adjustments to their budgets and apply for additional funds for unforeseeable and unavoidable expenditures.’
It is usually tabled three months before the national budget speech and gives a forecast as to how well the economy will perform during the upcoming quarter, year, or the long run.
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Key areas the Godongwana will be focusing is on public debt, grants, bailouts on state owned enterprises and strategies on economic growth and recovery.
Economists at Nedbank have predicted a gloomy financial standing for the country as they expect a shortfall of around R47 billion in taxes, while government spending around R56billion- a deficit of 5.5% of the country’s GDP.
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EXPERTS WARNINGS
While economists from Momentum Investments warn that major budget cuts that could affect service delivery may have dire consequences.
“With real government spending in per capita terms stagnating over the past decade, proposed austerity measures are likely to weigh more heavily on the fragile social fabric of the country. This risks an elevation in service delivery protests in the medium to longer term, in our opinion,” warned economist from Momentum Investments.
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With the R350 Social Relief of Distress grant expected to end in March 2024, the experts don’t forsee Godongwana making any major announcement on it.
“Any announcement on the potential extension of the Social Relief of Distress (SRD) grant could be delayed to the February 2024 national budget and as such may not reflect in projected government expenditures laid out in the medium-term budget.