Some economists believe currency, debt markets will be sensitive to Budget Speech
High government spending due to a huge public sector wage bill and social grants continues to cause a dilemma for the expenditure side.
Picture: Pexels
JOHANNESBURG - Some economists believe the currency and debt markets will be sensitive to Wednesday’s Budget Speech.
High government spending as a result of a huge public sector wage bill and social grants continues to cause a dilemma for the expenditure side.
Minister of Finance Enoch Godongwana will table the budget on Wednesday afternoon in the National Assembly.
The fiscal deficit is expected to peak in the region of 4.5% of gross domestic product (GDP) in the upcoming financial year.
Wealth management company Citadel said the markets would also be on the lookout for the growing debt-to-GDP figure, which is approaching 80%.
These figures could spell trouble for an emerging economy like South Africa, which is dependent on economic growth and job creation for survival.
Citadel’s chief investment officer (CIO), George Herman, said the budget proposals would be closely scrutinised amid a high debt burden and a strained tax base.
"This year is truly going to be a tough budget."
Herman said the proposals were more likely to be geared towards political demands ahead of the general elections.
"The government is facing that their promises are catching up to them on NHI [National Health Insurance] and other social promises."
Godongwana is expected to table the budget at 2pm.