Markets Look for Credible Signs of Progress in MTBPS

• Finance Minister Mboweni presents Medium-Term Budget at 1200GMT/0800ET

NEW TAX PLEDGES: Markets will be looking for clear conditionalities, timelines and cost-cutting measures for SOEs and public sector wages in Mboweni's statement Wednesday. Tax raising measures are expected to include a temporary 3-year solidarity tax on HNWI and companies, additional wealth and inheritance taxes, increased fuel levies and some form of digital taxation framework for possible implementation in February next year.

SOE FUNDING: Further funding is expected to be allocated to ailing SOEs including Eskom, SAA (ZAR10bln), SARS (ZAR1bln), Land Bank (ZAR1.5bln) and Denel (ZAR2.75bln). Tuesday's resignation of the SAA Chairwoman has raised expectations for a meaningful announcement that could include an equity partner or stringent restructuring measures. Meanwhile, details regarding Eskom's unbundling and energy stabilisation plans may disappoint, but expedited completion dates for Medupi & Kusile plants could offset some maintenance-related load-shedding risks.

PUBLIC SECTOR WAGES: Commentary on public sector wages may be limited. So far, ZAR160bln of the total ZAR390bn expenditure cuts outlined in Feb is to come exclusively from wage cuts (ZAR37bln in 2020), but little detail has been provided on the remaining ZAR230bln – which is expected to be clarified Wednesday.