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SA Budget Preview: (1/3)

SOUTH AFRICA
  • Today FinMin Mboweni delivers his budget speech at 1200GMT.
  • While the expectation is for bumper 4Q20 revenue collections to generate a tax windfall of around R100bn more than expected in October at the MTBPS, Markets will be looking for clear signs of commitment to fiscal consolidation and initiation of growth-inducing structural reforms.
  • Taxes: Severe constraints, minimal room to operate
  • Given extensive laffer curve constraints, expectations have aligned with minimal new taxation mechanisms outside of the predetermined R5bn taxes outlined in October, bracket-creep, fuel levies, alcohol/tobacco excise duties and possible (but mostly unlikely) wealth taxes to generate revenue.
  • The tax windwall is also expected to be used to fund vaccine purchases (~R24bn needed). Mboweni will also elaborate on this funding roadmap alongside private sector involvement. Additionally, the three-month R350/m social grant extension should be more than absorbed by the potential windfall and reprioritisation.
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market News
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market News

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