With regards to the latest Government Budget, signals are encouraging, but medium-term fiscal risks persist. The Budget gave guidance on government’s intent around the key long-term fiscal risks. Government remains committed to curbing its wage bill growth and discipline in terms of bailouts for state-owned companies. For the latter, Treasury said it will publish a framework outlining the criteria for funding. Treasury still insists that any permanent increase in the social relief, such as the distress grant (or similar grants) require a sustainable financing model. However, the execution risk remains very high for all three these spending areas (grants, wages, and SOE bailouts). This is also the case with growth-enhancing structural reforms, for which the Budget signalled ongoing commitment to the prevailing agenda, but also still with substantial execution risk.
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