There is often not much to keep you awake on budget day. But for today’s mini budget, there was excitement outside Parliament with revolting students, and excitement inside the chamber as revolting MPs tried to delay the speech.
If all this depressed you, the underlying message wasn’t much more cheerful.
Minister Nhlanhla Nene’s mini-budget today a stark outlook for the SA economy, and little new insight.
His forecast for economic growth this year has been adjusted downwards from 2% to 1.5%, and it is down for next year from 2.4% to 1.7%.
Meanwhile the Minister warned that as a result of the economic slowdown (partly due to electricity supply constraints) tax revenue will be down by R7.6 billion this year, and by R35 billion over the next three years.
“Without stronger economic growth, the revenue trend will remain muted. If revenue does not grow, expenditure increases cannot be sustained,” he told Parliament.
However, he indicated no major slowdown in spending, and said he did not expect any downgrading by ratings agencies this year.
“Even though the economic climate has deteriorated, we have been able to stay the course with discipline.”
He noted an up-creep in inflation to around 6% a year “over the period ahead.”
As 6% is the upper end of the 3%-6% target band on which the Reserve Bank focuses, this suggests there may well be renewed pressure for interest hikes, which would put further pressure on cash-strapped consumers.
The minister noted that proceeds from the sale of the State’s stake in mobile telecoms provider Vodacom will mainly go to Eskom, to the tune of R23 billion. A further R2 billion will go towards SA’s contribution to the setting up of the new BRICS bank.
Minister Nene said Cabinet has approved a bill on the planned new Carbon Tax, but said there will still be more consultation, and that this might delay its introduction beyond the current target of mid-2016.
The mini-budget is by its nature more of a numbers exercise, with most major taxation announcements coming in the main budget each February.
However, it does give the Finance Minister an opportunity to provide an update on how he sees the economy, and how revenue and expenditure are progressing.