Medium-Term Budget: Economists expect firmer fiscal stance, hint at room for smarter spending

Economists expect Finance Minister Enoch Godongwana to maintain strict fiscal discipline despite growing calls for higher public spending to stimulate the economy.

Lisette Ijssel de Schepper, senior economist at the Bureau for Economic Research at Stellenbosch University, says the fiscal picture has improved slightly, with better revenue collection, tighter expenditure control, and marginally stronger growth.

"If you look at the latest expenditure data, it's all looking a little bit better. Inflation is a little bit lower. Economic growth has picked up a bit, although not relative to their forecast. So, it's definitely a bit of a better story than what we saw in one of the three budgets presented earlier this year.

"If the revenue collection does not look better, will we see R20 billion in additional tax increases in the February budget. Now, it does seem as if the revenue is performing well enough that we can actually avoid that. So, it will be nice to get some sort of commentary on that.

"My colleagues and I will really be looking at whether there are any announcements around the inflation target change that the Reserve Bank announced, and whether National Treasury is going to fall in line with that. That won't have any impact from today or tomorrow, but low inflation could be beneficial for all of us, all taxpayers.”

De Schepper cautions that while the government should stay firm on debt reduction, there is room to redirect spending toward productive investment, particularly in digital infrastructure.

She stresses that a measured approach, balancing fiscal prudence with support for innovation and private-sector collaboration, could help South Africa break out of its slow-growth cycle in the years ahead.

To listen to De Schepper in conversation with 702 and CapeTalk’s Africa Melane, click below: