BUDGET 2019: GDP growth revised down

By Janice Roberts
Editor

Finance Minister Tito Mboweni today tabled the 2019 Budget, revising South Africa’s GDP growth forecast for 2019 to 1.5 per cent, from an estimated 1.7 per cent at the time of the 2018 medium-term budget policy statement (MTBPS). 

“The weaker outlook projects a slow improvement in production and employment following poor investment growth in 2018, and a moderation in global trade and investment,” the Budget Review stated. “The medium-term outlook is subdued, with GDP growth projected to reach 2.1 per cent in 2021, supported by a gradual improvement in confidence, more effective public infrastructure spending, and a better commodity price outlook than previously assumed.”

Over the next three years, general government infrastructure investment is projected at R526billion. “Interventions are already under way to improve the efficiency of this pipeline. In addition, government will contribute R100 billion to a blended-finance infrastructure fund over the next decade in the form of new spending, reprioritisation and guarantees.”

Treasury said that the fund will allow the public and private sectors to work together to finance sustainable social and economic infrastructure projects. 

It added that Government was “acting decisively” to mitigate the risks that Eskom poses to the economy and the public finances. 

“The restructuring of the electricity sector and state support for Eskom’s balance sheet are central to a transparent and credible reform of the utility’s business model. Over the long term, this will support the transition to a more sustainable and resilient economy.”

There was also an update on President Cyril Ramaphosa’s economic stimulus and recovery plan, announced in September 2018:

  • Telecommunications spectrum: Licensing for high-demand spectrum will take place this year, with the process
    expected to be completed in 2020/21.
  • Visa amendments: Gazetted amendments to the Immigration Act (2002) will waive the requirement of an unabridged birth certificate for children traveling from certain countries. Revised requirements for business visas clarify the documentation and accreditations required. An e-visa system will be launched with New Zealand as the pilot case. It will then be rolled out to other countries. The scarce skills list will be updated by March 2019.
  • Mining policy: Government issued a new Mining Charter. The Minister of Mineral Resources has signalled that controversial amendments to the Mineral and Petroleum Resources Development Act (2002) are no longer in keeping with the policy intent. Separate legislation for the regulation of oil and gas is being developed and consultations with various stakeholders are under way.
  • Administered price review: The Department of Energy has invited the public to comment on the basic fuel price review until 31 March 2019. Stakeholder consultations are under way to identify ways to improve the efficiency and reduce the costs of ports and rail, making the country’s exports more competitive.
  • Procurement: The Public Procurement Bill is being finalised. It will consolidate various procurement laws into one national legislative framework. Provisions in the bill will encourage participation from black-, youth- and women- owned businesses in state procurement.
  • Measures to safeguard industry: Government imposed a 35.3 per cent tariff on frozen bone-in chicken imports from Europe, as allowed by the terms of South Africa’s Economic Partnership Agreement with the European Union.

 

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