Finance Minister Tito Mboweni will deliver his 2020 Budget address on Wednesday afternoon as the country battles record-high unemployment, depressed economic growth, the likelihood of tax revenue shortfalls, and grim warnings that South Africa is marching towards a downgrade by Moody’s, the last major ratings agency to still assess SA’s sovereign debt at investment grade.
From the prospect of a renewed drive to cut the wage bill of state employees, to a hike in VAT and the establishment of a deposit-taking state bank, here’s what to look out for when the minister starts his speech at 2 p.m.
In his State of the Nation Address earlier in the month, President Cyril Ramaphosa announced that Mboweni would provide details on the creation of a new state bank in his Budget. Ramaphosa said the bank would “extend access to financial services to all South Africans,” without providing additional details.Mboweni, meanwhile, tweeted last week that the bank would be a “deposit-taking institution”.
Sovereign wealth fund
While plans for a sovereign wealth fund have been floated before, Ramaphosa’s announcement in his SONA that the government would be creating such a fund as a “means to preserve and grow the national endowment of our nation” surprised many analysts. Ramaphosa said Mboweni would provide further details.
Dr. Malan Rietveld, an expert in sovereign wealth funds, wrote in an opinion piece at the time that “practically every question that matters in this process remains unanswered”. Key questions, which Mboweni may answer on Wednesday, include the type of fund proposed and the source of its funding.