The Minister of Finance, Enoch Godongwana, delivered his maiden Medium Term Budget Policy Statement (MTBPS) on Thursday. The statement was aimed at providing an update on the projected fiscal policy direction in the medium term (three fiscal years). Agri SA notes the Medium Term Budget Policy Statement.
No big pronouncements were expected as this statement usually sets the tone for the main budget in February. The mainstay of the statement was always going to be the short-term gift on revenue collections, that is attributed to favourable global commodity prices, set against the backdrop of the long-term growth objective.
“It is on this premise that we are encouraged to see the minister exercise some restraint by not committing to spending without the assurance of a sustainable long-term revenue source,” says Nicol Jansen, chair of Agri SA’s Centre of Excellence: Economics. “Furthermore, the stance taken to pivot from spending patterns that are focused on current consumption to investment increases is welcome.”
Agri SA takes a keen interest in structural reforms, that include transport and electricity, amongst others. “We are encouraged that the minister is taking a hard stance on not giving more money to State-owned Entities with little to no returns. We are also encouraged by the opening up of the freight rail network to allow for private sector participation by the end of 2022. More than 75% of agricultural goods are currently transported on road, which has proven to be costly and the move back to rail will have significant positive implications for the sector.”
The commitment by the government to build a capable local government that delivers services effectively and efficiently as well as the specified plan of action that premiers, provincial EXCOS and MEC’s must implement to deal with challenges at the local government level, is welcomed. “We’re looking forward to learning more about the detail of this specified plan as the local communities can no longer bear the brunt of poor service delivery.”
The statement was an opportunity for the incumbent minister to inspire confidence once again and we believe has done so with a balanced budget statement, Jansen assures. “In a time where various factors remain a thorn on the side of the economic well-being of South Africa, fiscal consolidation is still intact, with the growth story somewhat shaping up.
“Whilst there are great unknowns in the outer years beyond the medium term and significant risks still present, the 2021 MTBPS was a balanced budget for the short term – sanity has prevailed.”
Enquiries:
Kulani Siweya Agri SA Agricultural economist (C) 084 018 6019
Nicol Jansen Chair of Agri SA’s Centre of Excellence: Economics (C) 082 948 2629
