Ahead of Finance Minister Enoch Godongwana’s delivery of the National Budget on February 22, banking and wealth management group Investec says it expects the Budget to remain focused on fiscal consolidation, with higher fiscal ratios remaining a risk.
Specifically, Investec believes downward adjustments to gross domestic product (GDP) and measures to address State-owned power utility Eskom’s debt burden will be central themes in the Budget, with loadshedding slicing more than expected off headline growth.
The firm says gross loan debt is likely to be projected near 71% of GDP for 2022/23, with the ensuing three medium-term years of 2023/24 to 2025/26 likely to run around 70.5% of GDP.
The budget deficit for 2022/23 was predicted at -4.9% of GDP, with Investec anticipating -4.8% on slight expenditure savings in the year, and -4.1%, -3.9% and -3.2% in the following years.
Investec expects government to make announcements related to Eskom’s debt burden and other measures with regard to the electricity crisis during the Budget speech,
Meanwhile, Investec says produced price inflation for final manufactured goods remained flat in December 2022, compared with December 2021, but decelerated to 13.5% from 15% in November.
The firm expects January’s reading to ease further to about 12.8% year-on-year, on a smaller contribution from the coke, petroleum, chemical and rubber and plastic products grouping, in which fuel price dynamics are captured.