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<p>Standard and Poor’s grabbed headlines after downgrading South Africa&#8217;s local debt to junk and foreign debt further down the sub-investment grade. Ravi Bhatia, Director, Sovereign Ratings at S&#038;P Global joins CNBC Africa for more.</p>


Why S&P is tougher on SA than Moody’s and Fitch

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<p>The WGBI is the most used global bond index for both indexation and benchmark purposes and requires at least one rating agency between S&#038;P and Moody’s to assign an investment grade credit rating to the local currency government bonds for inclusion.</p>


Why Goldman Sachs is buying into Ramaphosa’s New Deal

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<div class="TwoColumnLayout_column_1uZPg TwoColumnLayout_right_3kxIR" data-reactid="16">South Africa will implement spending cuts of 25 billion rand ($1.8 billion) and raise revenue by 15 billion rand in next year’s budget to contain growing debt, Finance Minister Malusi Gigaba told parliament on Wednesday.</div>
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<p data-reactid="40">Gigaba said the extra 40 billion rand, or 0.8 percent of GDP, would be used to tackle rising public debt which otherwise could balloon beyond 60 percent of GDP by 2022.</p>
<p data-reactid="41">($1 = 13.8930 rand)</p>
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South Africa to stabilise debt in next year’s budget: Gigaba

<p><strong>Statement by Gauteng Provincial Government </strong></p>
<p>Gauteng Premier, David Makhura, has requested the Finance Minister, Malusi Gigaba, to facilitate the lateral transfer of Michael Sachs, the Deputy Director General: Budget Office, from the National Treasury to the Gauteng Provincial Government. Mr Sachs will join the Office of the Premier as the Deputy Director General responsible for Performance Monitoring and Evaluation.</p>
<p>Michael Sachs holds two Masters Degrees from the University of London as well as the Kennedy School of Government, in Public Administration and Economics. Michael Sachs started off his public sector career in Gauteng Provincial Government in the Department of Health in 1994, he also worked as a Programme Director in the office of the then Leader of the House in the Gauteng Provincial Legislature. He has been with the National Treasury in various positions since 2008. Mr Sachs brings with him a wealth of experience and knowledge in policy making, public finance, macro-economic policy, policy evaluation and international best practice in policy implementation.</p>
<p>“I would like to use the skills of Michael Sachs to immediately help to stabilise the finances of the Gauteng Department of Health, which poses a major risk at the moment. He will thereafter focus on monitoring and fast tracking spending on infrastructure budgets of the Gauteng Departments and Municipalities”, said Premier Makhura.</p>
<p>Michael Sachs has accepted the offer of a transfer from the National Treasury to the Gauteng Provincial Government. The Premier has spoken to the Minister of Finance who has confirmed that he is attending to the Premier’s request for the transfer of Mr Sachs.</p>


Michael Sachs to join the Gauteng Provincial Government

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<p>Treasury Deputy Director General for the budget office, Michael Sachs resigned last week following allegations of meddling by the Presidency.</p>


Treasury’s loss of institutional memory is placing it in danger – economist

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<p>President Zuma has agreed to Finance Minister Malusi Gigaba&#8217;s call to set up an urgent judicial inquiry into tax administration and governance at SARS.Joining CNBC Africa for more is Professor Keith Engel, CEO, SA Institute of Tax Professionals.</p>


SA’s FinMin Gigaba is playing for both teams

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<p>Finance Minister Malusi Gigaba called for an inquiry into the South African Revenue Service citing declining tax morality and negative sentiment on the Revenue Service as justification for the inquiry.</p>


Why SA President Zuma agreed to a tax inquiry – tax specialist

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<p data-reactid="35">South Africa will launch an inquiry into weak tax collection by the revenue service after receiving the approval of President Jacob Zuma, Finance Minister Malusi Gigaba said on Tuesday.</p>
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<p data-reactid="43">Gigaba shocked financial markets last month by flagging wider deficits and rising government debt in a closely watched budget speech, attributing the dismal forecasts to sluggish growth and low tax receipts.</p>
<p data-reactid="45">On Tuesday he told a news conference that Zuma had granted his request for an inquiry by a judge into the administration and governance of the South African Revenue Service (SARS).</p>
<p>He added that the inquiry would be set up soon.</p>
<p data-reactid="47">“It is critical for government to determine the cause of the tax revenue under-collection in order to enable government to take urgent remedial steps to ensure that SARS is able to meet its revenue targets,” Gigaba told reporters.</p>
<p data-reactid="48">South Africa’s strained public finances are in the spotlight ahead of ratings reviews scheduled by major international agencies Moody’s and S&amp;P Global later this month.</p>
<p data-reactid="49">If Moody’s and S&amp;P downgrade South Africa’s local-currency rating one notch to sub-investment grade, or “junk” status, that could trigger forced selling of up to $12 billion of the country’s bonds.</p>
<p data-reactid="50">The gloom is compounded by allegations of influence-peddling in government that have hurt investor confidence, as well as infighting in the ruling African National Congress as it prepares to elect a new leader to succeed Zuma in December.</p>
<p>Zuma’s two terms as president have seen growth slow to a near-standstill and have been marred by a series of corruption scandals, including over spending of state money on upgrading his private Nkandla home.</p>
<h3>SAA TURNAROUND</h3>
<p data-reactid="53">Gigaba also addressed concerns about struggling state-owned South African Airways (SAA) on Tuesday, saying liquidity issues at the national airline had been attended to.</p>
<p data-reactid="54">SAA relies on government guarantees to keep it solvent and has been cited by the ratings agencies as a threat to South Africa’s public finances.</p>
<p data-reactid="55">Introducing new board members appointed to help turn around SAA, Gigaba said there were many investors interested in taking an equity stake in the airline and that he wanted to consolidate its assets.</p>
<p>He said: “We will continue &#8230; to have discussions about the strategic equity partner for South African Airways because ultimately we are going to need not only private sector capital, but also expertise for us to move forward and bring SAA back to sustainability.”</p>
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<p class="Attribution_content_27_rw" data-reactid="57">Reporting by Tiisetso Motsoeneng; Writing by Alexander Winning; Editing by Raissa Kasolowsky</p>
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S.Africa to investigate tax service after Zuma gives go-ahead

<p>South African Finance Minister Malusi Gigaba said on Tuesday that many investors were interested in taking an equity stake in South African Airways (SAA), after the government appointed new board members to turn around the struggling national airline.</p>
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<p data-reactid="40">SAA relies on government guarantees to keep it solvent and has been repeatedly cited by the major credit rating agencies as a threat to South Africa’s public finances.</p>
<p data-reactid="41">Gigaba told a news conference that he wanted the new chief executive of SAA, Vuyani Jarana, to restore confidence in the airline and consolidate its assets.</p>
<p data-reactid="42">“We will continue &#8230; to have discussions about the strategic equity partner for South African Airways because ultimately we are going to need not only private sector capital, but also expertise for us to move forward and bring SAA back to sustainability,” Gigaba said.</p>
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<p data-reactid="43">Last month, Gigaba cited bailouts to state-owned companies like SAA when unveiling dismal medium-term budget forecasts &#8211; which Moody’s described as “credit negative”.</p>
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<p class="Attribution_content_27_rw" data-reactid="45">Reporting by Tiisetso Motsoeneng; Writing by Alexander Winning; Editing by Ed Stoddard</p>
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South Africa finmin: many interested in equity stake in SAA

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<p>Richard Bottger, Portfolio Manager: Tower Capital Management joins CNBC Africa to discuss market movements in the South African market.</p>


Biggest risk to SA is that FinMin Gigaba could be sacked as ratings downgrade looms – analyst

<p style="line-height: 18.0pt; background: white; margin: 0cm 0cm 7.5pt 0cm;"><span style="font-size: 10.5pt; font-family: 'Helvetica','sans-serif'; color: #333333;">On 25 October, South Africa’s (Baa3 negative) Finance Minister Malusi Gigaba presented the country’s medium-term budget, which signals a marked credit-negative departure from earlier fiscal consolidation efforts.</span></p>
<div id="attachment_127928" style="width: 610px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-127928" class="wp-image-127928 size-full" src="http://cnbc.africa/wp-content/uploads/2017/06/moody_s_reuters.jpg" alt="" width="600" height="368" /><p id="caption-attachment-127928" class="wp-caption-text"><em>A Moody&#8217;s sign is displayed on 7 World Trade Center, the company&#8217;s corporate headquarters in New York, February 6, 2013. REUTERS/Brendan McDermid</em></p></div>
<p>&nbsp;</p>
<p style="line-height: 18.0pt; background: white; font-variant-ligatures: normal; font-variant-caps: normal; orphans: 2; text-align: start; widows: 2; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; word-spacing: 0px; margin: 0cm 0cm 7.5pt 0cm;"><span style="font-size: 10.5pt; font-family: 'Helvetica','sans-serif'; color: #333333;">The medium-term budget policy statement (MTBPS) revealed sizeable slippage in fiscal revenue (estimated by the National Treasury at 1.1% of GDP) in fiscal 2017, which ends 31 March 2018, relative to the February budget. The revenue shortfall is a key driver behind the National Treasury’s projections for the headline fiscal deficit of 4.3% of GDP in fiscal 2017, the highest level since 2009 and a substantial increase from 3.4% in the budget presented in February 2017.</span></p>
<p style="line-height: 18.0pt; background: white; font-variant-ligatures: normal; font-variant-caps: normal; orphans: 2; text-align: start; widows: 2; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; word-spacing: 0px; margin: 0cm 0cm 7.5pt 0cm;"><span style="font-size: 10.5pt; font-family: 'Helvetica','sans-serif'; color: #333333;">Significantly, the MTBPS envisages budget deficits remaining at 3.9% of GDP over the next three fiscal years, in contrast with targeted gradual fiscal consolidation tabled in the February budget. As a result, the National Treasury now expects accelerated accumulation of public debt, and expects public debt to GDP to exceed 60% of GDP by fiscal 2021, a notable departure from the debt stabilization objective outlined in the February budget.</span></p>
<p style="line-height: 18.0pt; background: white; font-variant-ligatures: normal; font-variant-caps: normal; orphans: 2; text-align: start; widows: 2; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; word-spacing: 0px; margin: 0cm 0cm 7.5pt 0cm;"><span style="font-size: 10.5pt; font-family: 'Helvetica','sans-serif'; color: #333333;">Concurrent with the debt burden increasing almost 7% annually between fiscal 2016 and fiscal 2020, the cost of borrowing has risen. According to Treasury projections, the interest burden will be 15% of revenue by 2020-21, which exceeds the 9.8% median of similarly rated sovereign peers. In our view, at this level, the cost of debt servicing is crowding out pro-growth expenditures while raising mandatory recurrent spending.</span></p>
<p style="line-height: 18.0pt; background: white; font-variant-ligatures: normal; font-variant-caps: normal; orphans: 2; text-align: start; widows: 2; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; word-spacing: 0px; margin: 0cm 0cm 7.5pt 0cm;"><span style="font-size: 10.5pt; font-family: 'Helvetica','sans-serif'; color: #333333;">The absence of fiscal consolidation both in terms of containing the fiscal deficits and reducing mandatory recurrent spending is credit negative, undermining debt sustainability and eliminating room for deploying fiscal stimulus in the event of a negative economic shock. Fiscal risks stemming from the relatively rapid debt increase are exacerbated by a continued increase in government guarantees to state-owned enterprises, where almost half is concentrated in Eskom, which generates 95% of South Africa’s electricity.</span></p>
<p style="line-height: 18.0pt; background: white; font-variant-ligatures: normal; font-variant-caps: normal; orphans: 2; text-align: start; widows: 2; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; word-spacing: 0px; margin: 0cm 0cm 7.5pt 0cm;"><span style="font-size: 10.5pt; font-family: 'Helvetica','sans-serif'; color: #333333;">Moreover, the lack of fiscal consolidation in the budget is also a setback to already feeble business confidence and growth. The lack of fiscal prudence indicated by the budget will undermine growth in an economy in a recession since first-quarter 2017 with weak economic activity, according to recent high-frequency indicators.</span></p>
<p style="line-height: 18.0pt; background: white; font-variant-ligatures: normal; font-variant-caps: normal; orphans: 2; text-align: start; widows: 2; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; word-spacing: 0px; margin: 0cm 0cm 7.5pt 0cm;"><span style="font-size: 10.5pt; font-family: 'Helvetica','sans-serif'; color: #333333;">The current MTBPS is the first fiscal policy document (i.e., budget or mini-budget) in the past several years that does not have the objective of fiscal consolidation.</span></p>
<p style="line-height: 18.0pt; background: white; font-variant-ligatures: normal; font-variant-caps: normal; orphans: 2; text-align: start; widows: 2; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; word-spacing: 0px; margin: 0cm 0cm 7.5pt 0cm;"><span style="font-size: 10.5pt; font-family: 'Helvetica','sans-serif'; color: #333333;">In our view, unless the government presents a credible fiscal consolidation plan in the February 2018 budget, debt sustainability is at risk.</span></p>
<p style="line-height: 18.0pt; background: white; font-variant-ligatures: normal; font-variant-caps: normal; orphans: 2; text-align: start; widows: 2; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; word-spacing: 0px; margin: 0cm 0cm 7.5pt 0cm;"><span style="font-size: 10.5pt; font-family: 'Helvetica','sans-serif'; color: #333333;">However, with lower levels of revenue than formerly projected, the thrust of the adjustment would need to come from the expenditure side, which will be challenging to achieve amid rising spending pressures in the run up to 2019 elections.</span></p>


Moody’s warns South Africa: Medium-Term Budget Signals Credit-Negative Change in Policy Direction

<p><em>Jameel Ahmad | FXTM</em></p>
<p>The rand has spent the last two weeks riding alternating waves of political uncertainty and weakening economic sentiment. Wednesday’s speech by Malusi Gigaba left the emerging market currency open to steep losses against the greenback following a downwards revision of economic growth from 1.3% to 0.7%, writes FXTM’s Global Head of Currency Strategy and Market Research, Jameel Ahmad.</p>
<div id="attachment_106462" style="width: 810px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-106462" class="wp-image-106462 size-full" src="http://cnbc.africa/wp-content/uploads/2017/03/Rands-Wikipedia.jpg" alt="" width="800" height="639" /><p id="caption-attachment-106462" class="wp-caption-text">Photo: Wikipedia</p></div>
<p>The financial markets perceived Gigaba’s maiden budget statement as very negative. The new Finance Minister slashed GDP forecasts and announced that the treasury would increase international borrowing. His speech sent the rand tumbling against all major currencies on Wednesday afternoon, and ZAR was testing R13.9915 – its lowest intraday level since December 2016 – within hours of the announcement. The Rand has continued to encounter selling pressure in the aftermath of the budget statement, with the USDZAR touching a new 2017 high, above 14.20 just one day following the budget statement.</p>
<p>This latest blow is ill-timed, coming hot on the heels of a particularly tumultuous week. An unexpected cabinet reshuffle last Tuesday wiped 0.5% from the currency within minutes of the news breaking. Selling pressure was not initially severe, which suggested political risk premium had already been priced in the Rand and provided some support to the currency. However, this confidence did not last long, as speculation mounted that President Zuma was considering dismissing his deputy, Cyril Ramaphosa.</p>
<p>The negative headlines surrounding South Africa are encouraging investors to price risk premium back into the Rand. However, the fortunes of the currency have not been helped by a recovery in momentum of the US Dollar. In the wake of an unexpected cabinet restructure and a “brutally honest” mid-term budget, investors will be watching to see how the rand performs as the ANC elective conference approaches at the end of 2017. The decline in GDP per capita over the last two years, coupled with a soaring unemployment rate, is likely to weigh heavily on the ZAR, and investor focus on economic data will likely intensify as a result of the budget statement this week.</p>
<p>The aftermath of last week’s selling pressure does suggest the rand is still sensitive to political risk, but domestic politics is unlikely to be the only factor weighing it down. The greenback concluded last week on a high, rallying on news that the US Senate had passed key legislation that would allow President Trump’s Republicans to push ahead with promised tax reforms. A widening spread between Japanese and US government bonds also prompted a sharp rise in USDJPY last week, suggesting that the rand’s fall was not solely down to internal political machination.</p>
<p>For regular market updates and commentary, follow Jameel on Twitter <a href="https://twitter.com/Jameel_FXTM">@Jameel_FXTM</a></p>


South African Rand Under Selling Pressure After a Troubling Week

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<p>South Africa&#8217;s Finance Minister Malusi Gigaba’s maiden Medium-Term Budget Policy Statement revealed a bleak state of public finances. The economic growth forecast was revised down to 0.7 per cent from 1.3 per cent for 2017.</p>


Key outcomes from Gigaba’s maiden budget speech

<p><strong>Fitch Ratings-Hong Kong/London-26 October 2017:</strong> South Africa&#8217;s (BB+/Stable) Medium-Term Budget Policy Statement (MTBPS) projects a sharp fall in fiscal revenue, but has no measures to contain the impact on deficits and debt, Fitch Ratings says. This suggests that the change in direction of policy making away from a focus on fiscal consolidation that we anticipated as a consequence of March&#8217;s cabinet reshuffle is under way and occurring faster than we had expected.</p>
<p><a href="http://cnbc.africa/category/insights/budget-day/mtbps-2017/">Click here for more on MTBPS</a></p>
<p>Wednesday&#8217;s MTBPS is the first major fiscal announcement since Malusi Gigaba was appointed Finance Minister in March. The government no longer forecasts stabilising debt, having raised its forecast for gross loan debt (its measure of consolidated government debt) to 58.2% of GDP for the financial year to end-March 2020 (FY19/20) from 52.4% previously. It expects a further rise to 60.8% by FY21/22.</p>
<p>This reflects large upward revisions in the Treasury&#8217;s consolidated government deficit forecast, to 4.3% of GDP (1.2pp wider than in the February budget) this year with only a moderate improvement to 3.9% next year and no further reduction in the two following years. Previously, the government had projected a decline to 2.6% in FY19/20.</p>
<p>The revisions reflect significant revenue shortfalls, of ZAR50.8 billion (1.1% of GDP) in FY17/18, as a result of lower GDP growth (now predicted to be 0.7% in 2017, down from 1.3% in the budget) and lower-than-expected tax buoyancy (the increase in tax revenues for a given increase in GDP). The government&#8217;s GDP growth forecasts are now in line with or lower than Fitch&#8217;s. However, there remains a substantial risk of additional revenue slippage if tax buoyancy fails to recover.</p>
<p>The MTBPS also raises questions about the role of the non-interest expenditure ceiling as a key fiscal policy anchor. The statement predicts that spending will exceed the ceiling set in February&#8217;s budget by ZAR4 billion in FY17/18, driven by the recapitalisation of South African Airways and South African Post Office. The amount is small at 0.1% of GDP, and the government is looking for ways to make the recapitalisation revenue-neutral so that a breach of the ceiling could still be avoided. But the fact that a breach is included in official projections points to a significant loss of credibility for this policy tool.</p>
<p>There are substantial risks to the ceiling from the expenditure side. Public-sector wage negotiations are under way, with a large divergence between trade union demands and MTBPS wage bill projections. The government also noted that capital injections for other state-owned enterprises (SOEs) are likely as profitability has declined sharply and lenders are reluctant to roll over maturing debt, but these are not included in fiscal projections.</p>
<p>The SOEs most likely to require injections, such as Denel, South African Express and the South African Broadcasting Corporation, are relatively small and the fiscal impact would be limited. But the document also points to a risk that Eskom, which holds much larger debt of 9.3% of GDP, may require renewed injections if stabilisation measures do not materialise. Gigaba emphasised that a nuclear power programme is not affordable, but the appointment of a new energy minister last week may signal a desire on the part of the government to accelerate a programme.</p>
<p>Proposals to shore up the public finances are being considered by a team of cabinet ministers, with measures to be announced in next year&#8217;s budget. But the fact that no agreement on consolidation measures or even headline targets for revenue increases were included in the MTBPS highlights how disagreements in the ANC have made it difficult to agree on savings measures.</p>
<p>We think that divisions in the ANC will persist beyond the party&#8217;s electoral conference in December, and it is not clear that the political environment will become more conducive to consolidation. The government also seems increasingly concerned that fiscal tightening measures might dent GDP growth and undermine efforts to rein in deficits.</p>


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Fitch warns that MTBPS suggests policy shifts to occur much faster than expected

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<p>The markets fallout from mid-term budget speech has continued. The rand has slumped to its weakest level this year; while bonds have plummeted past levels last seen when former finance Minister Pravin Gordhan was fired.</p>


Rand takes a beating on Gigaba budget shock

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<p>Minister of Finance, Malusi Gigaba’s medium-term budget policy statement exposes the full horror of President Jacob Zuma’s catastrophic management of the economy in South Africa &#8211; that is the view of the Demoratic Alliance and its Member of Parliament and Shadow Minister of Finance, David Maynier. He joins CNBC Africa for analysis.</p>


Gigaba’s mid-term budget points to Zuma’s mismanagement of economy – DA

<p><strong><em>By: Monique Vanek</em></strong></p>
<p>In a press conference with media ahead of the release of the Medium Term Budget Policy framework, South Africa’s Finance Minister Malusi Gigaba said it aimed to be as candid as possible about the dire situation South Africa finds itself in. Below are the highlights.</p>
<div id="attachment_122717" style="width: 693px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-122717" class="wp-image-122717 size-full" src="http://cnbc.africa/wp-content/uploads/2017/05/Gigaba2_Flickr-e1495621373543.jpg" alt="" width="683" height="496" /><p id="caption-attachment-122717" class="wp-caption-text">Photo: Flickr.</p></div>
<p><strong>Economic outlook is dire</strong></p>
<ul>
<li>2017 Economic growth revised downwards from 1.3% to 0.7%.</li>
<li>Growth expected to reach 1.9% in 2020.</li>
<li>GDP per capita has declined for two consecutive years.</li>
<li>95% of our wealth is in the hands of 10% of the population.</li>
<li>SA has twin challenge of growing economy &amp; ensuring inclusiveness.</li>
<li>SA’s expenditure ceiling could be breached by R3.9bn this year, mainly as a result of government’s recapitalisation of South African Airways and the South African Post Office. Government is considering the disposal of assets to offset this.</li>
<li>In 2016, gross fixed capital investment declined by 3.9%, with large decreases in mining and manufacturing.</li>
<li>Capital investment is expected to decline by 0.6% in the current year.</li>
<li>Government debt held by non-residents has risen from 4.4% of GDP in 2007 to 17.6% of GDP in 2017. A sharply negative shift in global investor sentiment towards South Africa could result in large capital outflows, with highly destabilising consequences for the economy.</li>
<li>Per capita income expected to continue to stagnate in the years ahead</li>
<li>The consolidated budget deficit will widen to 4.3% of GDP in 2017/18, against a 2017 Budget target of 3.1 per cent of GDP.</li>
<li>Gross national debt is projected to reach over 60% of GDP by 2022, with debt service costs reaching 15% of main budget revenue by 2020/21.</li>
<li>Aims to kick-start inclusive growth by implementing the 14 measures announced by Gigaba in June.</li>
<li>A presidential task team is considering a range of steps to bring the public finances back onto a sustainable path.</li>
<li>Growth must be characterised by radical economic transformation.</li>
</ul>
<p><strong>Asset registry to be created</strong></p>
<ul>
<li>Government plans to have a full asset registry available by March 2018 of non- and core assets that it can disposed of to ensure it does not breach its expenditure ceiling</li>
<li>Government is still considering whether to sell its stake in Telkom</li>
</ul>
<p><strong>Tax revenue shortfall </strong></p>
<ul>
<li>Gross tax revenue for the 2017/18 – 2019/20 period is projected to fall short of the 2017 Budget estimates by R209 billion.</li>
<li>Tax revenue projected to fall short of the 2017 Budget estimate by R50.8 billion in the current year</li>
</ul>
<p><strong>Tax changes</strong></p>
<ul>
<li>Cabinet has approved the release of the carbon tax bill to Parliament</li>
<li>Treasury to relook at medical tax credits</li>
</ul>
<p><strong>Tax revenue and administration</strong></p>
<ul>
<li>Government is noting slippage in tax compliance</li>
<li>SARS working with FIC &amp; SARB to close tax gaps</li>
<li>SARS, FIC &amp; SARB’s ability to combat cyber-crime must be enhanced</li>
<li>Treasury engaging with SARS on Tax Ombud recommendations relating to tax refunds.</li>
</ul>
<p><strong>Spending priorities </strong></p>
<ul>
<li>The public sector will spend more than R300 billion each year on infrastructure, with about half of this funded directly from the budget.</li>
<li>Lion’s share of economic infrastructure will be provided by State Owned Companies;</li>
<li>Municipalities spending is projected to be R197bn</li>
<li>Provinces are anticipated to spend R208bn over 3yrs</li>
<li>Education sector expected to spend R44bn</li>
<li>Cabinet approved Budget Facility for Infrastructure</li>
<li>Department of Planning, Monitoring &amp; Evaluation has prepared a mandate paper</li>
<li>Government will protect spending on core social programmes that benefit poor</li>
<li>Over next 3yrs consolidated spending will increase by 7.3% to R1.9trn in 2020/21</li>
<li>Community development, learning, culture &amp; health are the fastest-growing functions</li>
<li>No academic deserving student must be excluded due to financial constraints; more in budget 2018</li>
</ul>
<p><strong><br />
Stabilising and revitalising state-owned companies</strong></p>
<ul>
<li>The trend of SOCs seeking bailouts to finance operational expenditure, inefficiency and waste must end</li>
<li>Proposals to be made to make Govt guarantee framework more stringent</li>
<li>Retaining a national carrier is in the public interest</li>
<li>A strategic partner is still on the agenda for SAA</li>
<li>Eskom’s governance issues are a major concern</li>
<li>National Treasury to work with DPE to strengthen governance at Eskom</li>
<li>New board for Eskom before the end of November</li>
</ul>
<p>&nbsp;</p>
<p>&nbsp;</p>


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