Analysts warn Finance Minister Godongwana to tread lightly as he delivers annual budget

JOHANNESBURG - Some analysts have warned that Finance Minister Enoch Godongwana will have to tread lightly when he delivers the annual budget statement later this month.

This year’s budget comes amid a range of issues including a widening fiscal deficit, high debt servicing costs, as well as anaemic economic growth made worse by the energy and logistics challenges.

Godongwana will now have detailed plans to address the public finances that are in dire straits and plans to accelerate economic growth.

South Africa faces a double whammy of a declining tax base while government expenditure demands are increasing.

Experts at auditing and consulting firm Deloitte have described the combination of these challenges as the perfect ingredients for a fiscal storm.

Tax and legal expert at Deloitte Billy Joubert said the government has the tough job of raising enough revenue to avert the storm.

“The finance minister mentioned the need to raise R15 billion extra which sounds like a big number but compared to tax revenues of almost R1.8 trillion, it’s not a lot...”

But government and healthcare industry leader at the George Tshesane firm warns that cost containment won’t be easy in an election year.

“And I suspect a lot of what is going to come out both from the SONA [State of the Nationa Address] and the budget speech is that the election is going to have a halo effect.”

Both experts agree that Godongwana’s failure to tighten his belt will send the country out with its begging bowl to international lenders.