Budget 3.0: Godongwana should prioritise economic growth, says economist

JOHANNESBURG - A tough week of fiscal juggling awaits the National Treasury this week as Finance Minister Enoch Godongwana prepares to table budget 3.0 on Wednesday.

This follows two failed budgets that saw political and public outrage over proposals to raise the standard value-added tax (VAT) rate.

Godongwana will now have to plug fiscal gaps without further ruffling feathers with higher taxes.

Some economists believe Godongwana will play it safe this time around to avoid another impasse.

Already getting the thumbs up from Cabinet, some political parties are said to be on board with Godongwana’s latest budget.

With value-added tax (VAT) off the table, an economist at Sanlam Investments, Patrick Buthelezi, says Godongwana's focus is likely to be on slashing government expenditure.

“Again, the problem with government finances is low economic growth, not revenue. Therefore, government should prioritise growth-promoting areas like investment to achieve a higher growth trajectory in future.”

Buthelezi says he expects a projected revenue hole of about R75 billion over the medium term and a deterioration of the economic growth outlook due to trade wars and global policy uncertainty.

“We expect the minister to revise economic growth forecast lower, from an estimate of 1,9%.