Medium term budget thread

The_Right_Honourable_Brit

The_Right_Honourable_Brit

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m.fin24.com

From Eskom's R450bn debt to tax shortfalls: What to watch out for in the medium-term budget | Business

This may the most important medium-term budget yet.
m.fin24.com m.fin24.com

Finance Minister Tito Mboweni is expected to announce how the state will reduce struggling power utility Eskom's R450bn debt burden on Wednesday when he delivers his second medium-term budget address in Cape Town.

The mini budget, which takes place in October, broadly sets out government's spending plans for the next three years. It also includes updates on tax revenues, the rate of South Africa's economic expansion, and revisions to expenditure. It does not, generally, include announcements on new taxes or revenues as these are the purview of the main February Budget.

Mboweni's address in Wednesday afternoon may be the most important medium-term budget to date, says Adrian Saville, the chief executive of Cannon Asset Managers in Sandton. "With a resurgence of load shedding, crisis-level unemployment figures, and economic growth teetering between zero and one percent, government is quickly running out of time and options to address the country’s challenges."
Eskom's growing debt burden has been flagged as one of the key challenges facing SA's economy by rating agency Moody's, the sole agency to still asses SA at investment grade. Moody's is set announce whether it will alter SA's sovereign credit rating on Friday.
Click to expand...
 
ToxicBunny

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Well colour me surprised...

Lets see how close to 2pm they can be for a start of the speech.
 
konfab

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Nothing will happen to Eskom with economically illiterate morons like Gordhan running the show.

She said board members were between a rock and a hard place in terms of some of the decisions they know they have to make because of an interfering shareholder.

Public enterprises minister Pravin Gordhan is the shareholder representative at Eskom. Mavuso did not mention him by name.

...

"I think we've got to be honest about the issue of the municipal debt and say that we all know the issue of municipal debt is a political decision. It's got absolutely nothing to do with the Eskom board.”

...
She said labour should not continue to “sit there as principals with a red pen” and think that they don't have any role to play in saving Eskom.

“We made this decision as this board last year to say that we are going to give 0% increase because we realised the dire situation of Eskom. It was labour that said, 'If you dare do that, it's going to be a declaration of war'.
Click to expand...
https://www.timeslive.co.za/politic...erference-says-there-should-be-load-shedding/
 
Mista_Mobsta

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"I think we've got to be honest about the issue of the municipal debt and say that we all know the issue of municipal debt is a political decision. It's got absolutely nothing to do with the Eskom board.”
This is why you need to start privatising the energy sector.

Budget speech notes released on Bloomberg
*S. AFRICA GROSS DEBT SEEN AT 71.3%/GDP IN 2022-23 VS 60.8% NOW
*SOUTH AFRICA'S GROSS DEBT COULD REACH 80.9% OF GDP BY 2027-28

USD/ZAR immediately plummeted from 14.6350 to 14.7400 within a space of 3 minutes.
 
S

ShaneE

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and now R14.83.... Does anyone have a link to where I can watch the speech ?
 
Mista_Mobsta

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ShaneE said:
and now R14.83.... Does anyone have a link to where I can watch the speech ?
Click to expand...
Newzroom Afrika

Straight excerpt from Bloomberg:
"
  • Government debt climbs because of continued support for power utility Eskom, prompting Mboweni to warn about the threat of a debt trap
    • Gross debt is forecast to jump to 71.3% of GDP by 2022-23, from 60.8% this year
    • The debt trajectory is up, swelling to an estimated 80.9% of GDP in 2027-28
    • “Our national debt is increasing at an unsustainable rate,” Mboweni says
    • Those numbers don’t include taking over Eskom debt – no decision has been taken on that yet
  • As expected, the budget deficit also widens
    • Treasury sees the consolidated gap at 5.9% of GDP this year (as opposed to the 4.5% forecast in February)
    • It peaks at 6.5% next year before easing to 5.9% two years later
    • All those estimated shortfalls would be the biggest since the financial crisis a decade ago
    • Taxes are seen coming in 52.5 billion short of the February projection
    • Mboweni warns the state wage bill must be curbed and taxes may have to rise again next year
    • “The consequence of not acting now would be gravely negative for South Africa,” he says. “Over time, the country would likely face mounting debt-service costs and higher interest rates and may enter a debt trap”Economic growth is forecast to remain weak, extending sub-2% expansion to a decade
  • Growth is seen at 0.5% this year (down from 1.5% in the main Budget), rising to 1.2% next year, the 1.6% and 1.7% the next two
    • Treasury’s prediction for this year is lower than the central bank’s 0.6%
  • Eskom gets more money, but there is no details on planned debt restructuring
    • The company will be given an extra 10 billion rand in the year ending in March 2022
    • Should Eskom not be able to sell debt, the government may offer more support to help it meet obligations
    • Reforms to reduce Eskom’s debt burden will only be considered once the utility reduces costs and makes progress in the unbundling process
  • Other state companies also get bailouts
    • The government will repay South African Airways’s 9.2 billion rand of guaranteed debt over the next three years
    • The South African Broadcasting Corp., Denel, SA Express also get cash
    • Mboweni says there are “conversations involving SAA and potential equity partners, which would liberate the fiscus from this SAA sword of Damocles”
    • The tax agency and prosecutions office receive an additional 1 billion rand and 1.3 billion rand respectively
  • There will be some amendments to exchange controls
    • The central bank will bring in a “more modern, transparent and risk-based approvals for cross-border flows”
    • Rules on active currency hedging, loops and mortgages for people living and working in the country will be reformed
    • The “HoldCo regime” will be extended to all banks
"
 
Temujin

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Mista_Mobsta said:
"I think we've got to be honest about the issue of the municipal debt and say that we all know the issue of municipal debt is a political decision. It's got absolutely nothing to do with the Eskom board.”
This is why you need to start privatising the energy sector.

Budget speech notes released on Bloomberg
*S. AFRICA GROSS DEBT SEEN AT 71.3%/GDP IN 2022-23 VS 60.8% NOW
*SOUTH AFRICA'S GROSS DEBT COULD REACH 80.9% OF GDP BY 2027-28

USD/ZAR immediately plummeted from 14.6350 to 14.7400 within a space of 3 minutes.
Click to expand...
Recouping the last 20+ years of looted funds will go a long way to clearing all that debt ;)
 
S

ShaneE

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Messages
160
Mista_Mobsta said:
Newzroom Afrika

Straight excerpt from Bloomberg:
"
  • Government debt climbs because of continued support for power utility Eskom, prompting Mboweni to warn about the threat of a debt trap
    • Gross debt is forecast to jump to 71.3% of GDP by 2022-23, from 60.8% this year
    • The debt trajectory is up, swelling to an estimated 80.9% of GDP in 2027-28
    • “Our national debt is increasing at an unsustainable rate,” Mboweni says
    • Those numbers don’t include taking over Eskom debt – no decision has been taken on that yet
  • As expected, the budget deficit also widens
    • Treasury sees the consolidated gap at 5.9% of GDP this year (as opposed to the 4.5% forecast in February)
    • It peaks at 6.5% next year before easing to 5.9% two years later
    • All those estimated shortfalls would be the biggest since the financial crisis a decade ago
    • Taxes are seen coming in 52.5 billion short of the February projection
    • Mboweni warns the state wage bill must be curbed and taxes may have to rise again next year
    • “The consequence of not acting now would be gravely negative for South Africa,” he says. “Over time, the country would likely face mounting debt-service costs and higher interest rates and may enter a debt trap”Economic growth is forecast to remain weak, extending sub-2% expansion to a decade
  • Growth is seen at 0.5% this year (down from 1.5% in the main Budget), rising to 1.2% next year, the 1.6% and 1.7% the next two
    • Treasury’s prediction for this year is lower than the central bank’s 0.6%
  • Eskom gets more money, but there is no details on planned debt restructuring
    • The company will be given an extra 10 billion rand in the year ending in March 2022
    • Should Eskom not be able to sell debt, the government may offer more support to help it meet obligations
    • Reforms to reduce Eskom’s debt burden will only be considered once the utility reduces costs and makes progress in the unbundling process
  • Other state companies also get bailouts
    • The government will repay South African Airways’s 9.2 billion rand of guaranteed debt over the next three years
    • The South African Broadcasting Corp., Denel, SA Express also get cash
    • Mboweni says there are “conversations involving SAA and potential equity partners, which would liberate the fiscus from this SAA sword of Damocles”
    • The tax agency and prosecutions office receive an additional 1 billion rand and 1.3 billion rand respectively
  • There will be some amendments to exchange controls
    • The central bank will bring in a “more modern, transparent and risk-based approvals for cross-border flows”
    • Rules on active currency hedging, loops and mortgages for people living and working in the country will be reformed
    • The “HoldCo regime” will be extended to all banks
"
Click to expand...
Thanks a lot!
 
Mista_Mobsta

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Amendments to exchange controls?
Why?

Are they planning to do prescribed assets to forcefully fund their corrupt unionised SOE's with your savings whilst they amend exchange controls so you can't pull your savings out whilst investing in a free market into various offshore currencies/assets?
 
Enzo Matrix

Enzo Matrix

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Mista_Mobsta said:
Amendments to exchange controls?
Why?

Are they planning to do prescribed assets to forcefully fund their corrupt unionised SOE's with your savings whilst they amend exchange controls so you can't pull your savings out whilst investing in a free market into various offshore currencies/assets?
Click to expand...
They want to prevent money from leaving the country, for their own corrupt reasons
 
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