<div style="max-width: 100%;">&nbsp;</div>
<p>&nbsp;</p>
<p>While South Africa’s Finance Minister, Tito Mboweni is currently briefing the media on the recently announced Covid-19 relief package, big business seems confident that the measures put in place will assist in rebuilding the economy.</p>


Vusi

Mygrowthfund Venture Partners CEO: Govt relief measures fail to address underlying structural and socio-economic issues

<div style="max-width: 100%;"></div>
<p><script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script></p>
<p>Yesterday South African Finance minister Tito Mboweni delivered the 2021 budget speech. Some felt he was rather conservative, while others feel there isn’t much the finance minister could have done. Taxes, grants vaccine costs are some of the changes announced. Joining CNBC Africa to unpack the speech are Peter Attard Montalto, Head of Capital Markets Research at Intellidex; Tatonga Rusike, Sovereign Analyst in the S&#038;P Emerging and Logan Wort, Executive Secretary of the African Tax Administration Forum.</p>


#BudgetSpeech2021: Here’s what analysts are saying about Tito Mboweni’s budget

<div style="max-width: 100%;"></div>
<p><script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script></p>
<p>Tabling South Africa’s 2021 Budget this after, Minister Tito Mboweni said that government will stabilise debt at 88.9 per cent of GDP in 2025 and 2026. The Minister reported that South Africa’s economy is expected to rebound by 3.3 per cent this year, following a 7.2 per cent contraction in 2020. Joining CNBC Africa to review that budget is Maarten Ackerman, the Chief Economist at Citadel; Tendani Mantshimuli, Consumer Economist at Liberty &#038; Muneer Hassan, a Senior Lecturer for Taxation at the University of Johannesburg.</p>


#BudgetSpeech2021: A tax

#BudgetSpeech2021: A tax, economic review of Finmin Mboweni’s 2021 budget

<div style="max-width: 100%;"></div>
<p><script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script></p>
<p>All eyes are on Budget this afternoon with Tito Mboweni. While some industries have already started recovering from the effects of the COVD-19 pandemic, there is still much work to be done. Gilbert Mosena, Acting CEO, National African Federated Chamber of Commerce and Industry, NAFCOC joins CNBC Africa for more.</p>


#BudgetSpeech2021: NAFCOC calls for more focus on SME support & growth

<div style="max-width: 100%;">
  <video-js
    data-account="1571595826001"
    data-player="c0AOssA7"
    data-video-id="6211931168001"
    data-embed="default"
    controls=""
    data-application-id=""
    class="vjs-fluid"></video-js>
</div>
<p><script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script></p>
<p>The focus in South Africa is on debt levels, as ratings agencies have pushed the country further in junk status. Finance Minister Tito Mboweni called the move a painful one, as the downgrades will raise borrowing costs. Joining CNBC Africa to review the case of debt in Africa is Cobus van Staden, South African Institute of International Affairs.</p>


Assessing debt sustainability in Africa

<div style="max-width: 100%;">
  <video-js
    data-account="1571595826001"
    data-player="c0AOssA7"
    data-video-id="6205221250001"
    data-embed="default"
    controls=""
    data-application-id=""
    class="vjs-fluid"></video-js>
</div>
<p><script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script></p>
<p>South Africa’s medium term budget will be a defining litmus test on whether the government can take the country out of an economic slump or send it in the direction of a financial crisis.</p>


#MTBPS2020: A tightrope walk for Finmin Mboweni

<div style="max-width: 700px;">
  <video-js
    data-account="1571595826001"
    data-player="c0AOssA7"
    data-video-id="6184002562001"
    data-embed="default"
    controls=""
    data-application-id=""
    class="vjs-fluid"></video-js>
</div>
<p><script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script></p>
<p>Global ratings agency S&#038;P has affirmed Zambia’s long- and short-term foreign and local currency sovereign credit ratings with a negative outlook. This news was overshadowed by the surprise move by Zambian President Lungu over the weekend, as he fired the reserve bank governor with immediate effect and no reason. Ridle Markus, Africa Strategist, Absa Corporate and Investment Banking joins CNBC Africa for more.</p>


Zambian president fires central bank governor


<p>The International Monetary Fund will lend South Africa $4.3 billion in emergency financial support to help the country repair  the catastrophic economic damage wreaked by the COVID-19 pandemic.</p>



<p>The South African economy is expected to contract by more than 11 per cent as it buckles under the lockdown imposed in March to try to ward off the disease that has claimed nearly 7,000 lives in a matter of months. Three million South Africans have lost their jobs &#8211; nearly a third of the working population with formal jobs. Economists fear many more jobs could be lost as cash-strapped companies go down like dominoes.</p>



<p>&#8220;The additional IMF funding is a low interest loan that contributes to government’s fiscal<br>relief package while respecting South Africa’s decisions on how best to provide relief to<br>the economy and those worst affected by the current crisis. It will also pave the way for<br>government to provide the necessary financial relief required to forge a new economy and<br>mitigate further harm to the economy, &#8221; Treasury said in a statement.</p>



<p>The money will go to frontline health services, job creation, stabilising public debt and reforms to encourage job creation.</p>



<p>“Government’s Covid-19 economic support package directs R500 billion straight at the problem. This is one of the largest economic response packages in the developing world. The South African Reserve Bank has reduced interest rates and made it easier for banks to lend money, and supported liquidity in the domestic bond market. Government spending and tax proposals, guarantee scheme and wage protection measures, are providing<br>protection to workers and the poor, while assisting to stay afloat during these tough<br>economic times. Going forward, our fiscal measures will build on our policy strengths and<br>limit the existing economic vulnerabilities which have been exacerbated by the Covid-19<br>pandemic,” says South African finance minister Tito Mboweni.</p>



<p>Mboweni, presented a Special Adjustments Budget in Parliament on June 24 as part of government’s key interventions to the Covid-19 pandemic. This loan from the IMF goes some way to financing those measures.</p>



<p> </p>


PRETORIA, SOUTH AFRICA - MARCH 16: Finance minister, Tito Mboweni briefs the media on the details of government interventions in various sectors of the departmental portfolios on COVID-19 at DIRCO Media Centre.

106468131-1585649490275gettyimages-1207457483

IMF approves $4.3 bn to help South Africa fight COVID-19

<div style="max-width: 700px;">
  <video-js
    data-account="1571595826001"
    data-player="c0AOssA7"
    data-video-id="6173945547001"
    data-embed="default"
    controls=""
    data-application-id=""
    class="vjs-fluid"></video-js>
</div>
<p><script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script></p>
<p>In a case filed by South Africa’s opposition party, Finance minister Tito Mboweni has denied that government will use state funds to rescue South African Airways. Furthermore, the preconditions needed for the rescue plan to be implemented needs to be approved by all parties by midnight today and if there is no acceptance a further amendment of the plan will take place on Friday. George Nell, Senior Business Rescue Practitioner at Corporate Business Rescue joins CNBC Africa for more.</p>


SAA business rescue plan: What funding options are available?


<p>JOHANNESBURG (Reuters) &#8211; The South African government has not committed to fund a restructuring plan for struggling South African Airways (SAA), Finance Minister Tito Mboweni said in court papers seen by Reuters on Tuesday.tit</p>



<p>Administrators took over SAA in December after almost a decade of financial losses, and last week creditors approved the restructuring plan, which requires at least 10 billion rand ($600 million) of new funds, on the understanding the government would find the necessary cash.</p>



<p>Mboweni said in an affidavit filed in the High Court that funding options the government might explore included approaching institutions for investment of pension funds, private equity or other partners who might want a shareholding in a restructured SAA.</p>



<p>The minister was responding to a court case launched by opposition party the Democratic Alliance, which wants to block Mboweni from using emergency powers to channel more public funds to rescue the airline.</p>



<p>Mboweni and Public Enterprises Minister Pravin Gordhan sent a letter last week to SAA’s administrators committing to “mobilising funding” for the plan.</p>



<p>Mboweni said in his affidavit that no definitive decisions had been taken on how funds would be sourced for SAA. He said he had not used his powers to authorise using funds from the National Revenue Fund, nor was such a move imminent.</p>



<p>The finance ministry has not responded to a Reuters request for comment.</p>



<p>SAA’s administrators need certain conditions to be met by Wednesday for their restructuring plan to work.</p>



<p>One of them is that the government finds money for the plan, which envisages scaling back the airline’s fleet and shedding jobs before gradually ramping up operations as COVID-19 disruption eases.</p>



<p>In a document sent to trade unions over the weekend giving the rationale for the planned job cuts, the administrators said SAA had made a net loss of 5.5 billion rand in the year to end-March, with further losses incurred since.</p>



<p>The administrators plan to have terminated all SAA’s aircraft leases by the end of July, leaving it with nine Airbus A340 planes which are on sale, Louise Brugman, spokeswoman for the administrators told Reuters.</p>


South Africa has not committed to fund SAA rescue plan, finance minister says

<p><iframe loading="lazy" src="https://www.youtube.com/embed/0WXeP_TpX3M" width="640" height="360" frameborder="0" allowfullscreen="allowfullscreen"></iframe></p>
<p>As the dust settles from South Africa’s emergency budget announcement, economist and ratings agencies have expressed their pessimism towards the finance minister Tito Mboweni’s ability to cut expenditure and deliver on his debt stabilisation plan. Joining CNBC Africa for this discussion are Mamello Matikinca-Ngwenya, Chief economist at FNB, Nicky Weimar, Chief Economist at Nedbank and Murtaza Moulvi, Head of Financial Markets at Standard Chartered Bank&#8230;.</p>


How will SA finmin Mboweni cut expenditure?

<div style="max-width: 700px;">
  <video-js
    data-account="1571595826001"
    data-player="c0AOssA7"
    data-video-id="6169167398001"
    data-embed="default"
    controls=""
    data-application-id=""
    class="vjs-fluid"></video-js>
</div>
<p><script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script></p>
<p>Just last week finance minister Tito Mboweni outlined the emergency budget to nurse South Africa through the Covid-19 crisis. A big part of this budget was a plan for South Africa to get its debt under control within four years. Fitch Ratings, the agency that downgraded South Africa in April doubts whether South Africa can do this. CNBC Africa’s Chris Bishop spoke to Jan Friederich, Senior Director of Fitch Ratings for more.</p>


Fitch expresses doubt over SA’s debt consolidation plans


<p>Finance Minister Tito Mboweni’s emergency budget on June 24 was meant to provide a roadmap showing how the government intends to deal with a dire fiscal situation.</p>



<p>Unfortunately, the speech underwhelmed on detail.</p>



<p>We already had a good idea of what the Treasury expects with regard to the economic and fiscal outcomes this year -due to the ‘leaks’ over the weekend- &nbsp;but what we were looking for was detail on how Mr Mboweni plans to manoeuvre the ship back on course.</p>



<p>The Treasury now expects GDP to contract by 7.2% this year compared with the 0.9% growth rate expected in February; the fiscal deficit is expected to reach 15.7% of GDP in FY 2020/21 compared with the 6.8% of GDP deficit projected at the start of the year; while public debt is now expected to end the fiscal year at 81.8% of GDP from 65.6% of GDP previously.</p>



<p>In the official budget publication, the Treasury puts forward two scenarios: active and passive. The passive scenario refers to the debt trajectory if current trends persist, while the active scenario incorporates all the intended adjustments.</p>



<p>The passive scenario sees public debt remaining on a strong upward trajectory, reaching 114% of GDP by 2024/25, while the active scenario sees public debt peaking at 87.4% of GDP in FY 2023/24.</p>



<p>Mr Mboweni noted that the government needs to find spending adjustments of about R230bn over the next two years.</p>



<p>Tax measures of R40bn over the next four years will also be required.&nbsp; Details with regard to these tax proposals will be given in the 2021 budget. Nothing was said about South African Airways (SAA). The Land Bank will be recapitalised with R3bn.</p>



<p>No further information was given with regard to the ongoing public sector wage dispute or the government’s intentions after the current bargaining round ends next fiscal year.</p>



<p>Mr Mboweni stated that this year, nearly half of all consolidated revenue will go towards the compensation of workers in the public sector.</p>



<p>On the ongoing wage dispute, the finance minister stated, “Minister Senzo Mchunu is negotiating with our partners in the labour movement to find a balanced solution that sets compensation at an appropriate, affordable and fair level. We wish him well.”</p>



<p>It is important to note that the R230bn in spending cutbacks required over the next few years is in addition to the R160bn cut to the public-service wage bill set out in the 2020 budget. In commenting on the latter, Mr Mboweni stated: “Failure to achieve these reductions will require larger reductions to wages and other spending areas in the outer years of the spending framework, and higher revenue increases.”</p>



<p>Mr Mboweni confirmed that the country would be borrowing $7bn from international finance institutions.</p>



<p>During his post-address media briefing, the finance minister said that South Africa would be asking the IMF to approve a $4.2bn loan in early July.</p>



<p>It was previously said that the country would be making use of a $1bn facility from the National Development Bank- that is, the BRICS Bank-&nbsp; meaning the balance is likely to come from the World Bank.</p>



<p>Approaching the IMF and World Bank for assistance will rankle many within the ruling African National Congress (ANC) and its alliance partners. Mr Mboweni found himself in the cross hairs in April when ANC Secretary General Ace Magashule and his alliance counterparts called on President Cyril Ramaphosa to reject an approach to the IMF or World Bank for assistance in the fight against Covid-19 following comments by the finance minister.</p>



<p>The perhaps unavoidable decision to turn to international finance institutions will no doubt expose ideological cleavages within the alliance, as Mr Mboweni, with the presumed backing of Mr Ramaphosa, may be seen to have crossed a red line.</p>



<p>No major intentions with regard to policy reform were mentioned. While a budget reading does not usually play host to such announcements, many hoped that the unprecedented nature of the situation would encourage bold action.</p>



<p>Mr Mboweni did, however, state that a firm policy basis has been laid by the Treasury’s Towards an Economic Strategy for South Africa paper, which was considered by Cabinet and accepted last year.</p>



<p>After conceding that progress has been slow, partly attributable to Covid-19-related delays, the finance minister stated that “we are now ready”.</p>



<p>Another noteworthy comment by Mr Mboweni, in referring to the policy shifts put forward by his policy document, went “One of these is to shift away from the electricity supply system that was introduced in 1923, when George V, the Queen’s grandfather, was the king of what was known as the Union of South Africa. The last few years have shown the inefficiency of this archaic system. Provisional allocations to Eskom were made on the understanding that government’s Electricity Roadmap would be implemented.&nbsp; Progress is slow.&nbsp; The principle of zero-based budgeting is that we must see demonstrable value for money: Eskom will need to show progress in meeting the milestones as laid down in the Roadmap. This is non-negotiable. Progress on the other reforms will be given in the MTBPS [Medium-term Budget Policy Statement].”</p>



<p>The emergency budget describes a desirable fiscal destination but does not provide a credible roadmap to get there.</p>



<p>Mr Mboweni used a significant proportion of the speech to give listeners an economics and history lesson on sovereign debt crises, suggesting that there are a few that still need some convincing.</p>



<p>Given that the current wage dispute is ongoing in the courts, it is understandable that no further details were provided on the matter.&nbsp; But given the importance of containing this spending, the lack of a medium-term plan left the speech wanting.</p>



<p>Furthermore, Mr Mboweni highlighted the severity of the fiscal situation by starting the speech with a striking statistic: “This year, out of every rand that we pay in tax, 21 cents goes to paying the interest on our past debts.”</p>



<p>This, combined with the fact that around half of all consolidated revenue will go towards the compensation of workers in the public sector, clearly shows why the country is in such a fiscal mess.</p>



<p>Jacques Nel &#8211; Economist</p>


SA Finance Minister Tito Mboweni delivers his emergency budget

#SpecialBudget2020: Finance Minister Tito Mboweni delivers emergency budget (full speech)

THE WEEKEND READ: Analysis– a budget long on words but short on detail.

<div style="max-width: 700px;">
  <video-js
    data-account="1571595826001"
    data-player="c0AOssA7"
    data-video-id="6167230601001"
    data-embed="default"
    controls=""
    data-application-id=""
    class="vjs-fluid"></video-js>
</div>
<p><script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script></p>
<p>A day after Finance minister Tito Mboweni delivered his crucial supplementary budget speech, the markets are down, the rand dollar exchange is taking a hit and the economy looks bleak at best. So where to now? Arthur Kamp, Chief Economist at Sanlam Investments joins CNBC Africa for more.</p>


Is SA ready to deal with a looming sovereign debt crisis?

<div style="max-width: 700px;">
  <video-js
    data-account="1571595826001"
    data-player="c0AOssA7"
    data-video-id="6167149412001"
    data-embed="default"
    controls=""
    data-application-id=""
    class="vjs-fluid"></video-js>
</div>
<p><script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script></p>
<p>Joining CNBC Africa to discuss a post-budget analysis of the emergency budget speech yesterday is Azar Jammine, Director and Chief Economist at Econometrix and Maarten Ackerman, Chief Economist and Advisory Partner at Citadel.</p>


#SpecialBudget2020: Economists react to Mboweni’s supplementary budget

<div style="max-width: 700px;">
  <video-js
    data-account="1571595826001"
    data-player="c0AOssA7"
    data-video-id="6166969166001"
    data-embed="default"
    controls=""
    data-application-id=""
    class="vjs-fluid"></video-js>
</div>
<p><script src="//players.brightcove.net/1571595826001/c0AOssA7_default/index.min.js">
</script></p>
<p>Tertia Jacobs, Treasury Economist at Investec and Ronald King, Head: Public Policy &#038; Regulatory Affairs at PSG join CNBC Africa’s Fifi Peters to breakdown the supplementary budget presented by finance minister Tito Mboweni.</p>


#SpecialBudget2020: Did finmin Mboweni’s supplementary budget meet expectations?


<p></p>



<p>South African finance minister Tito Mboweni painted a bleak picture of the South African economy during his emergency budget speech and quoted the Bible in plotting the way forward for a struggling economy expected to contract by 7.2% this year.</p>



<p>In a 40 minute speech Mboweni outlined a package of support for some state owned enterprises warnings of a the dangers of debt and a sovereign debt crisis. He said he was going to borrow $7 billion from international lenders to try to shore up the money-starved economy.</p>



<p>&#8220;Enter through the narrow gate for wide is the gate and broad is the road that leads to destruction and many find it. The narrow road is the one that leads to life and few can find it,&#8221; says Mboweni quoting the gospel of Matthew in the Bible. He warned that South Africa could face the same fate as the wrecked German economy of the 1920s and Zimbabwe and Argentina in more recent years. </p>



<p>Mobweni said the government&#8217;s tax target was likely to fall short by R300 billion making more borrowing inevitable and the repayments crippling with a national debt expected to top R4 trillion by the end of the year. He said for every Rand the country earned it had to spent 21 cents merely paying back debt.</p>



<p>The government has revised its revenue down from R1.43 trillion to R1.16 trillion as COVID-19 virtually shut down the economy for nearly three weeks.</p>



<p>Mboweni said the government was planning to narrow the deficit and stabilize debt at 87.4% of GDP by 2023/24. </p>



<p>On the other side of the coin, Mboweni was forthcoming with taxpayers&#8217; money in giving R100 billion to the infrastructure fund and R3 billion to help restructure the struggling Land Bank. </p>


Tito Mboweni

Mygrowthfund Venture Partners CEO: Govt relief measures fail to address underlying structural and socio-economic issues

#BudgetSpeech2021: Here’s what analysts are saying about Tito Mboweni’s budget

#BudgetSpeech2021: A tax, economic review of Finmin Mboweni’s 2021 budget

#BudgetSpeech2021: NAFCOC calls for more focus on SME support & growth

Assessing debt sustainability in Africa

#MTBPS2020: A tightrope walk for Finmin Mboweni

Zambian president fires central bank governor

IMF approves $4.3 bn to help South Africa fight COVID-19

SAA business rescue plan: What funding options are available?

South Africa has not committed to fund SAA rescue plan, finance minister says

How will SA finmin Mboweni cut expenditure?

Fitch expresses doubt over SA’s debt consolidation plans

THE WEEKEND READ: Analysis– a budget long on words but short on detail.

Is SA ready to deal with a looming sovereign debt crisis?

#SpecialBudget2020: Economists react to Mboweni’s supplementary budget

#SpecialBudget2020: Did finmin Mboweni’s supplementary budget meet expectations?

“Broad is the road that leads to destruction,” bleak words in a bleak budget from Tito Mboweni.

News Tips

Advertise With Us

Tito Mboweni

Mygrowthfund Venture Partners CEO: Govt relief measures fail to address underlying structural and socio-economic issues

#BudgetSpeech2021: Here’s what analysts are saying about Tito Mboweni’s budget

#BudgetSpeech2021: A tax, economic review of Finmin Mboweni’s 2021 budget

#BudgetSpeech2021: NAFCOC calls for more focus on SME support & growth

Assessing debt sustainability in Africa

#MTBPS2020: A tightrope walk for Finmin Mboweni

Zambian president fires central bank governor

IMF approves $4.3 bn to help South Africa fight COVID-19

SAA business rescue plan: What funding options are available?

South Africa has not committed to fund SAA rescue plan, finance minister says

How will SA finmin Mboweni cut expenditure?

Fitch expresses doubt over SA’s debt consolidation plans

THE WEEKEND READ: Analysis– a budget long on words but short on detail.

Is SA ready to deal with a looming sovereign debt crisis?

#SpecialBudget2020: Economists react to Mboweni’s supplementary budget

#SpecialBudget2020: Did finmin Mboweni’s supplementary budget meet expectations?

“Broad is the road that leads to destruction,” bleak words in a bleak budget from Tito Mboweni.

News Tips

Advertise With Us

Newsletters