Download presentation
Presentation is loading. Please wait.
Published byHarry McDaniel Modified over 6 years ago
1
The 2008 National Budget: A Remarkable Document!
Jac Laubscher Group Economist 26 February 2008
2
Constraints Global economic uncertainty
Downwardly revised growth forecasts Eskom/ electricity crisis Perceived political pressure post-Polokwane
3
Assessment A remarkable budget A bold budget
A budget that oozes confidence Long-term vision Long-term growth potential Sustainable growth Embracing globalisation Modernisation of the state Upward revisions to revenue projections Growth orientation Exchange control relaxation
4
Perceived risk to policy continuity
Anti-cyclical fiscal policy Structural vs. cyclical issues Inflation targeting Policy regime vs. policy objective Much of Polokwane proposals already government policy Role of government has been increasing already Wait-and-see till after 2009: MTB not cast in stone
8
Macroeconomic background
Uncertain outlook for global economy, including commodity prices Lower growth Large current account deficit, under upward pressure High inflation, set to rise further before declining, and with upside risk Weakening exchange rate in response to declining portfolio inflows
9
Rand vs. comparable currencies
Source : I-Graph
10
Macroeconomic projections
2007 2008 2009 2010 Oct 07 Feb 08 GDP (%) 4.9 5.0 4.5 4.0 4.8 4.2 5.3 4.6 CPIX (%) 6.5 7.1 4.7 C/A (%) -6.7 -7.2 -6.9 -7.3 -7.7 -7.8 -8.0
11
Macroeconomic projections comparison
2007 2008 2009 2010 Feb 08 SIM GDP (%) 5.0 5.1 4.0 3.6 4.2 4.3 4.6 ? CPIX (%) 6.5 7.1 4.9 4.7 C/A (%) -7.2 -7.1 -7.3 -7.8 -7.0 -8.0
12
Exchange controls Timing speaks of confidence Impact on the rand?
Estimated outflows up to R140 bn. Flexible exchange rate will act as regulator Encourage two-way trade Enhanced hedging possibilities Less volatility SARB coming to end of reserve accumulation? Controls replaced by surveillance?
13
Electricity crisis Strong argument that electricity tariffs should increase Challenge is to manage economic impact Electricity levy of 2c/kwh introduced Long-term environmentally sensitive energy policy to override short-term electricity supply problems Eskom to get R60 billion over next 5 yrs (R20 billion over next three years) Format not fully specified, but will not be grant If Eskom requests credit guarantee, it will be granted
14
Consolidated national budget
2007/08 2008/09 2009/10 2010/11 Revenue % of GDP 28.4 28.7 28.6 Expenditure 27.4 27.6 28.1 27.9 Budget balance 20 331 18 486 16 018 20 526 1.0 0.8 0.6 0.7
15
Revenue projections +12% in 2008/09, +10.8% p.a. next three years
Higher base Higher inflation Broadening of the tax base new individual tax payers in 2007 because of increased employment and improved compliance Simplification of tax compliance for small businesses could draw more into formal tax net Rising tax-to-GDP ratio
17
Tax-to GDP ratio
18
Consolidated government expenditure
Pressure on departments and lower spheres of government to perform Average real growth reduced from 6.4% to 6.1% Priorities are infrastructure, social services (incl. social grants) Government expenditure continuing to take up more of GDP
20
Government expenditure to GDP ratio
21
Government debt Debt to GDP ratio declining
Interest on public debt as % of GDP declining Creating room for other public sector borrowers; PSBR set to increase Anchoring long-term interest rates
23
Long-term potential growth
Corporate tax rate reduced Simplified tax dispensation for small business Infrastructure spending Skills enhancement Improved government savings Industrial policy incentives (qualified) Emphasis on productivity, competitiveness, and export capacity Could be bedeviled by big government, taking redistribution too far
24
Conclusion Accelerating growth? Yes Advancing social development? Yes
Reducing inequality? Yes
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.