Economists expect Budget Speech to focus on economic growth

Finance Minister, Enoch Godogwana will be faced with the challenging task of allocating limited resources towards multiple competing priorities when he delivers his Budget address this week.

Economic analysts say they expect the focus of the budget to be on economic growth and revenue revisions.

This as expenditure pressures rise due to the energy crisis, weak economic growth and a need for the extension of the special distress relief grant.

During the midterm budget last year, government warned against a number of global and domestic risks to the economic outlook.

It cited a slowdown in global economic growth, higher levels of inflation, rising interest rates and intensified power supply disruptions on the local front.

A Chief Economist at Investec, Annabel Bishop says National Treasury is likely to cut its previous growth of 1.4%.

Bishop says, “The Reserve bank actually revised its growth forecast from above 1% to 0.3% for the year, so National Treasury is like to move its forecast to below 1% and of course as you reduce your growth expectations that can place upward pressure on your fiscal ratio and here we’re talking about the budget deficit ratio.”

In October last year, government projected that its consolidated spending would increase to R 2.2 Trillion in 2022-23 with social wages taking up the largest share of spending followed by debt servicing costs.

Chief Economist at PricewaterCoopers, Lullu Krugel, says the extension of the Social Distress Grant (SDG) is expected to add more pressure to the expenditure ceiling.

Krugel says, “SRD Grant has been extended to March 2024 and I think it’s kind of a bridge until we get to more clarity around the basic income grant or something that’s an interim until we get there. With these grants, when they first introduced them during COVID, we were saying to each other as economists that the likelihood of government having the ability to saying we are stopping that is going to be very difficult, we’ve been discussing the basic income grant for sometime so I really hope that we get some clarity in this budget about what the plans are.”

VIDEO: Budget Speech preview with the CEO of the Pan-African Investment and Research Services, Dr Iraj Abedian:

[embedded content]