SAA, jobs & Sars shortfall: Economists on expectations ahead of Mboweni's budget

24 June 2020 - 07:00 By Unathi Nkanjeni
Finance minister Tito Mboweni is expected to deliver the supplementary budget speech to parliament on Wednesday.
Finance minister Tito Mboweni is expected to deliver the supplementary budget speech to parliament on Wednesday.

As the country waits for finance minister Tito Mboweni's budget speech, economists have expressed their expectations.

Mboweni is expected to deliver the supplementary budget speech on Wednesday, following the government’s announcement that it would spend R500bn to support the economy during the Covid-19 pandemic.

Head of Wits Business School Dr Jannie Rossouw told TimesLIVE that the government should not prioritise embattled SAA.

“Mboweni should provide more clarification on the SA Revenue Service (Sars) revenue shortfall that is expected this year. We also need to understand the size of the funding gap,” he said.

“I would look forward to Mboweni saying that state-owned enterprises will not get any further financial help and SAA will be allowed to go bankrupt. I would also like him to say that civil servants will get no salary increase because there will be no money.”

Rossouw said it would be ideal for Mboweni to share his views on economic growth for the next three years because that would indicate how the government was responding to the Covid-19 crisis.

Sanisha Packirisamy, an economist at Momentum Investments, said Mboweni should give a broad analysis of the expected impact of Covid-19 and the associated containment measures on the labour force, the business environment, the broader economy and poor and vulnerable parts of society.

Packirisamy said markets are likely to see a growth revision and called for more detail on the impact per sector as well as an updated impact on jobs.

“We are likely to see an urgency to retrace previous sovereign rating downgrades, a revised revenue shortfall, emphasis on the need for a social compact, an update of the social transfers and unemployment insurance fund [UIF] payouts granted in this period, and potentially an update on the emergency financing available to SA from the International Monetary Fund [IMF]," said Packirisamy.

She also said a more detailed analysis of phase 3 of the government’s stimulus package, which outlines how it aims to position the economy for structurally higher growth, should be included in that budget.

“We would like to see concrete plans and an update of implementation in areas such as digital migration and the release of spectrum, measures to boost tourism including destination marketing and tourism safety police, as well as a reduction in red tape and more favourable financing conditions for small and medium enterprises, which are a large generator of jobs in our country.”

Packirisamy said although SA has followed the action guidelines stipulated by the IMF to fight the spread of the virus, the government should detail plans on preparing for recovery after Covid-19.

“More detail needs to be seen, which will involve dealing with elevated debt levels, an escalation in bankruptcies and a rise in unemployment and inequality.

“Job protection - through embarking on measures such as reduced working hours or pay cuts, the preservation of business and trade networks and payment holidays on expenses such as rent, interest on loans and insurance - could allow for a smoother recovery.”