Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Public money, private plans: MPs demand Post Office transparency

      13 June 2025

      Coal to cash: South Africa gets major boost for energy shift

      13 June 2025

      China is behind in AI chips – but for how much longer?

      13 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025

      10 red flags for Apple investors

      13 June 2025
    • World

      Yahoo tries to make its mail service relevant again

      13 June 2025

      Qualcomm shows off new chip for AI smart glasses

      11 June 2025

      Trump tariffs to dim 2025 smartphone shipments

      4 June 2025

      Shrimp Jesus and the AI ad invasion

      4 June 2025

      Apple slams EU rules as ‘flawed and costly’ in major legal pushback

      2 June 2025
    • In-depth

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025

      South Africa unveils big state digital reform programme

      12 May 2025

      Is this the end of Google Search as we know it?

      12 May 2025
    • TCS

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025

      TCS | Sentiv, and the story behind the buyout of Altron Nexus

      3 June 2025

      TCS | Signal restored: Unpacking the Blue Label and Cell C turnaround

      28 May 2025
    • Opinion

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025

      Digital giants boost South African news media – and get blamed for it

      29 May 2025

      Solar panic? The truth about SSEG, fines and municipal rules

      14 April 2025

      Data protection must be crypto industry’s top priority

      9 April 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Current affairs » What to expect in this week’s mid-term budget

    What to expect in this week’s mid-term budget

    By Agency Staff22 October 2018
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp
    Finance minister Tito Mboweni and President Cyril Ramaphosa

    Finding R50-billion for a stimulus package is the unenviable task facing finance minister Tito Mboweni in the mid-term budget — and he’s only two weeks into the job.

    Mboweni has to do that after an inflation-beating wage increase for civil servants and with state companies burning cash. He also has to show on Wednesday how the government plans to stem escalating debt to help ward off another credit-rating downgrade, that its self-imposed spending ceiling remains intact, and that the first-half recession is a thing of the past.

    The former central bank governor was appointed to the position on 9 October, after Nhlanhla Nene resigned, and will have little room to maneouvre. A Bloomberg survey shows the government won’t meet its goal of narrowing the budget deficit to 3.6% of GDP this fiscal year.

    There’s really no doubt that this year’s budget will contain a lot of bad news – the only real question is how bad

    “There’s really no doubt that this year’s budget will contain a lot of bad news — the only real question is how bad,” said John Ashbourne, an economist at Capital Economics. “Mboweni will prioritise holding to the deficit target, but this will require painful cuts. There isn’t, frankly, a lot of money available.”

    President Cyril Ramaphosa’s recovery plan calls for spending to be rejigged to fund projects that can spur growth and cut into the country’s unemployment rate of 27%, near a 15-year high. This comes after the economy slipped into its first recession in a decade and S&P Global Ratings and Fitch Ratings cut the nation’s debt to junk last year.

    Moody’s Investors Service warned this month it could follow suit if South Africa doesn’t stabilise debt.

    Ramaphosa replaced Jacob Zuma as president in February, vowing to stimulate growth and attract investment, fix state companies and root out corruption. The budget comes a day before the start of a three-day investment summit to help lure US$100-billion into the economy, with investors seeking evidence finances are under control.

    Under-performance

    “We expect some revenue under-performance, though the year-to-date data suggests that this should be modest,” said Elna Moolman, the head of economics at Standard Bank Group, Africa’s biggest lender. “The challenges will rather be on the expenditure side, where the higher-than-budgeted wage settlement, spending related to the presidential stimulus and recovery plan, and possible support for the state-owned companies would have to be accommodated.”

    Economists in a Bloomberg survey estimate the budget deficit at 3.8% of GDP in the current fiscal year, and that it will be in line with the treasury forecasts of 3.6% and 3.5% for the next two.

    Gross debt was projected by officials in February to peak at 56% of GDP in 2021. While the cost of servicing this is the third-fastest growing expense in the budget, the projection was an improvement on the more than 60% given a year ago.

    Image: Steve Buissinne

    Personnel costs account for about 35% of state spending, and a three-year wage agreement will see 1.3 million civil servants getting raises of as much as 7% for the year to March 2019.

    State firms have also been a drain on the budget, with large bailouts to power utility Eskom and South African Airways. Guarantees on debt to the companies total more than R460-billion, of which 65% has been taken up, according to national treasury. That exposure was flagged by rating companies as one of the key risks for the economy.

    Higher income tax rates and the first increase in VAT since 1993 may have helped plug the gap, but the burden has weighed on households amid rising fuel costs and there may not be space for further measures.

    Mboweni is “in a very tight space”, Isaac Matshego, a senior economist at Nedbank, said by phone. “The government will tread very carefully.”  — Reported by Ana Monteiro, Colleen Goko and Sarina Yoo, with assistance from Ntando Thukwana, (c) 2018 Bloomberg LP



    Cyril Ramaphosa Tito Mboweni
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleMusk’s Boring Co to open first hyperloop test tunnel
    Next Article Pinnacle reveals results of Huawei global survey of AMI market

    Related Posts

    Telecoms operators back BEE reforms – but warn against favouritism

    5 June 2025

    Starlink storm: BEE reforms fuel tensions in Ramaphosa’s GNU

    26 May 2025

    Sita says it welcomes SIU corruption probe

    26 May 2025
    Company News

    Huawei Watch Fit 4 Series: smarter sensors, sharper design, stronger performance

    13 June 2025

    Change Logic and BankservAfrica set new benchmark with PayShap roll-out

    13 June 2025

    SAPHILA 2025 – transcending with purpose, connection and AI-powered vision

    13 June 2025
    Opinion

    Beyond the box: why IT distribution depends on real partnerships

    2 June 2025

    South Africa’s next crisis? Being offline in an AI-driven world

    2 June 2025

    Digital giants boost South African news media – and get blamed for it

    29 May 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.