Finance Minister Enoch Godongwana will deliver the medium-term budget policy statement (MTBPS) speech later on Wednesday, with pundits expecting him to tackle Eskom’s debilitating debt pile.
Godongwana is expected to table the MTBPS, colloquially known as the “mini budget”, at 2pm.
Andre Cilliers, currency strategist at TreasuryONE, said analysts are hoping for clarity on the way forward regarding Eskom’s financial stability.
“The power utility sits with a R400-billion debt burden and a collapsing power grid. Analysts are also hoping for some mention of fiscal reform in order to address low growth and job creation,” said Cilliers.
Most economists say a large portion of Eskom’s debt needs to be absorbed by the state to make the embattled state-owned power producer financially stable.
The MTBPS allows government departments to apply for adjustments to their budgets, apply for roll-overs, and request additional funds for unforeseeable and unavoidable expenditure. It indicates how government intends allocating the upcoming national budget.
Casey Delport from Anchor Capital said this year’s MTBPS is expected to address several critical long-term outstanding issues.
“The deterioration in key state-owned enterprises’ performances has been a severe limitation on SA’s growth potential, and the MTBPS is expected to outline some of the government’s plans for Eskom’s debt, with the market anticipating that the state may absorb at least some portion of the debt,” Delport said.
Cosatu said it is hopeful that the minister will announce a debt relief package for Eskom. “It cannot sustain its debt burden of R400-billion simultaneously,” said the trade union federation.
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