What to expect from Finmin Godongwana’s medium-term budget

Minister Enoch Godongwana is set to deliver the Medium-Term Budget Policy Statement on November 4, 2021. As the new Minister of Finance, all eyes are on him to see where his focus areas will lie and how they will differ from his predecessor, who faced challenges in reining in debt. Isaah Mhlanga, Chief Economist at Alexander Forbes, discussed the upcoming budget speech on CNBC Africa, shedding light on the expectations and challenges that Minister Godongwana will face. Mhlanga believes that while Godongwana may not introduce completely new fiscal management strategies, he will continue the budget framework set by the National Trade Area. However, there are new risks to consider, such as the unplanned 19 billion public sector deal and increasing pressure from civil society for initiatives like the universal basic income grant. The South African economy has shown some positive growth, providing a slight buffer, but challenges remain in managing debt levels and addressing various spending pressures. Mhlanga also noted that the delayed release of the Medium-Term Budget Policy Statement is not unusual given the volatility in the economic environment and should not raise suspicion. Moving forward, growth expectations for the economy remain steady for the current year, with some impact from recent events like the July riots. However, concerns linger for 2022 and 2023 as global growth is expected to moderate, financial conditions tighten, and key markets like China show signs of slowdown. Locally, structural issues like energy supply constraints from Eskom and slow economic reforms pose additional challenges to growth prospects. The looming pressure from social welfare programs and healthcare initiatives further complicates the fiscal landscape for Minister Godongwana as he navigates the medium-term expenditure framework.