This year’s Medium-Term Budget Statement (MTBPS) will be a bit different than the last few years as the statement will be presented against the backdrop of an improved macroeconomic environment.
Finance Minister Enoch Godongwana is set to deliver his medium-term budget policy statement on October 30.
Business sentiment is rebounding as political and policy uncertainty ease, according to Nedbank’s Economic Review.
“The government’s focus is firmly on service delivery, with the crowding-in of the private sector in the large infrastructure projects prioritised,” Nedbank noted.
The fact that the energy crisis seems to be a thing of the past and the electricity supply has improved has also played a major role in boosting the economy.
“The power grid is more stable, with load shedding not being implemented for over 200 days as Eskom operates more efficiently and more renewable energy generation is commissioned.”
Nedbank noted that the transport system constraints remain in SA and hamper the state’s economic activity.
“Although there are green shoots of the constraints in the logistics chain being addressed, the inefficient transport system will remain a drag on economic activity for the foreseeable future.
“Lower inflation will facilitate more interest rate reductions. Our real GDP growth forecasts are 1% in 2024, and 1.6% and 1.7% in 2025 and 2026, respectively,” the bank said.
Nedbank’s figures are marginally lower than the Treasury’s estimate for 2024 but aligned for the next two years.
In terms of revenue, the bank projected slightly higher aggregate revenue growth in financial year of 2024/25 as gross tax revenue is lifted by a robust increase in personal taxes and a marginal gain in corporate taxes.
“However, relatively subdued spending will contain value added tax collections, with a slight shortfall likely for the financial year.”
Nedbank estimated gross tax revenue to be R2 billion higher than Treasury’s February 2024 estimate, lifting aggregate revenue growth to 6.1%.
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