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

South Africa's Finance Minister, Tito Mboweni, presented a crucial budget that left many questioning if he rose to the challenge. In a recent interview on CNBC Africa, experts Tertia Jacobs, Treasury Economist at Investec, and Ronald King, Head of Public Policy & Regulatory Affairs at PSG, provided insights into the supplementary budget. The key theme of the discussion revolved around the country's financial challenges and the measures proposed by the Finance Minister to address them. Here are the key points discussed in the interview: 1. Focusing on Debt Spiral: Ronald King highlighted the importance of addressing the debt spiral South Africa is facing. While some expected more details on State-Owned Enterprises (SOEs), Mboweni's emphasis on halting the debt spiral was deemed crucial. Implementing the proposed measures could lead to positive outcomes in the next two to three years, although the coming years are expected to be challenging. 2. Budget Deficit and Expenditure Reduction: Tertia Jacobs pointed out the unexpected increase in the budget deficit and a revenue shortfall of approximately 300 billion rand. The decision to reduce expenditure by 250 billion rand going forward was seen as critical to prevent a debt spiral. The bond market found comfort in the government's commitment to reducing the budget deficit. 3. Zero-Based Budgeting and Public Sector Wage Bill: The introduction of zero-based budgeting was highlighted as a significant move, requiring departments to scrutinize every cent spent to reduce unnecessary expenses. Negotiations on the public sector wage bill were mentioned, with hopes that increases may be below inflation. The impact of the wage bill on the economy and the need for restructuring were emphasized as crucial steps. In addition to these points, the interview touched on the expected borrowing from international markets, the impact of COVID-19 on revenue, and the importance of faster growth for revenue acceleration. The experts discussed the potential reactions of ratings agencies to the budget proposals, emphasizing the need for expenditure cuts, infrastructure programs, and efficiency gains. They highlighted the importance of building confidence in the economy to attract investors and stimulate growth. Overall, the interview shed light on the challenges facing South Africa's economy and the measures proposed in the supplementary budget. The road ahead may be tough, but with strategic planning and implementation, there is optimism for a brighter financial future.