OVERVIEW: 10 important reads on Tito Mboweni's #MTBPS2018

2018-10-24 15:05

New Finance Minister Tito Mboweni has delivered his maiden mini budget speech against a tough economic backdrop. Here are 10 stories to read.

Tito Mboweni

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Last Updated at 10:47

24 Oct 19:37

Mboweni on Moyane, markets and 'sweating' through his budget

Finance Minister Tito Mboweni quipped that he expected to see a "sweaty" picture of himself in the news on Wednesday with a headline that reads, 'Minister sweats through his budget'. 

Mboweni was addressing the media shortly after his mid-term budget speech in Cape Town, where there is presently a heatwave.

Mboweni touched on several matters during the briefing, including the reaction of the markets to his budget speech, SAA and suspended SARS commissioner Tom Moyane.

24 Oct 19:34

Fin24 special: The latest news and insights on the mini budget

Follow Fin24's budget hub for breaking news and analysis of the 2018 Medium-Term Budget Policy Statement by Finance Minister Tito Mboweni.

24 Oct 19:27

Markets WRAP: Financials hold ground despite rand's budget beating

Financials held on to their gains despite the rand's slump on worries over the health of the SA economy following Finance Minister Tito Mboweni's mini budget.

24 Oct 19:25

Twitter fumes over Mboweni's 'we need to pay our tolls' remark

South Africans on Twitter reacted angrily to Finance Minister Tito Mboweni's remark on Wednesday that "we need to pay our tolls". Mboweni was in Parliament on Wednesday for his maiden budget speech and got many hot under the collar for his comment.

24 Oct 19:22

Markets likely to be disappointed, ratings downgrade could be 'close call' - financial analysts

Although Finance Minister Tito Mboweni's first mini budget can be seen as an honest reflection of the economic situation in SA, markets may continue to be disappointed, while a ratings downgrade by Moody's may be a close call, financial analysts say.

24 Oct 17:51

Ferial Haffajee: Zuma’s long shadow stalks Ramaphosa’s new dawn

Former president Jacob Zuma’s legacy hung like an albatross around the neck of his successor Cyril Ramaphosa, as a gloomy medium-term budget policy statement landed on Wednesday. 

In the eight months since the tabling of the national budget in February, Ramaphosa’s hopes for higher growth, better tax collection and an uptick in jobs have been dampened as the costs of the capture years continue to wreak havoc.

24 Oct 17:50

WATCH: Mixed reactions to Tito Mboweni's 2018 mini budget speech

President Cyril Ramaphosa’s ambitious plan to kick-start the economy, fix state-owned companies, attract billions in investments, and restore policy certainty - all at the same time – has taken centre stage in the mini budget tabled by new Finance Minister Tito Mboweni.

24 Oct 17:44

WATCH: The mini budget in under 3 minutes

Fin24's Moeshfieka Botha gives an overview of what the finance minister said about VAT, spending shortfalls, the economy and more in his maiden mini budget.

24 Oct 17:30

24 Oct 17:27

Professor Matthew Ocran, Mpho Tsebe and Abdul Azeez Davids speak to Fin24's Moeshfieka Botha about the mini budget speech:

24 Oct 15:10

Mini budget in a nutshell: Mboweni takes bull by the horns

President Cyril Ramaphosa’s ambitious plan to kick-start the economy, fix state-owned companies, attract billions in investments, and restore policy certainty - all at the same time – has taken centre stage in the mini budget tabled by new Finance Minister Tito Mboweni.

24 Oct 15:08

It is a call to all of us: public servants, business, civil society, communities and labour. This is what our people deserve.  

I thank you

24 Oct 15:08

All South Africans want us to choose the path of prosperity and opportunity.  We are at the crossroads, we can either choose to go left or to go right or to go straight on the path to nowhere.

We are choosing the road of prosperity and opportunity, where  the true spirit of South Africa lies. I urge South Africans to journey with us on this path. A path destined to take us out of poverty and deprivation.

24 Oct 15:07

We can choose whether or not these difficulties break us as a country, or make us.  We can choose whether we will allow the axe to cut our soul, or if we will try again. We must make sacrifices and choose a path of redemption.

As Dickens notes: “It is a far, far better thing that I do, than I have ever done; it is a far, far better rest that I go to than I have ever known.”

24 Oct 15:06

In conclusion, Speaker, let us not forget that this year marks the centenary of Madiba’s birth. As we were preparing this Medium-Term Budget Policy Statement, his wise words came to mind:  

“Difficulties break some, but make others. No axe is sharp enough to cut the soul of a sinner who keeps on trying, one armed with the hope that he will rise even in the end.”

24 Oct 15:06
6. Our growth reforms will be underpinned by fiscal and monetary stability. I will ensure our debt stabilises and is reduced as soon as possible.

24 Oct 15:06

5. The President has initiated a plan that will support our economic recovery. We will implement growth enhancing economic reforms. We will reprioritise public spending to support growth.

We will take steps to establish an Infrastructure Fund that will create opportunities for private-sector financing. We will urgently deal with education and health, and invest in municipal social infrastructure.

24 Oct 15:06
4. State institutions are being repaired and renewed, but serious governance problems exist across the public sector. Our state-owned companies need to be reconfigured in a number of ways.

24 Oct 15:06

3. Against this background, together, we have much to do. We must repair damaged government institutions, as their failure impacts poorer households the most.

There have been failures at municipal, provincial and national departments. There have been governance challenges at key state institutions

24 Oct 15:05

2. Our economic outlook has been revised down due to a technical recession and turmoil in international markets.

Our economic growth will be just 0.7 per cent this year, rising to over 2 per cent over the medium-term.

Relative to the 2018 /17  Budget, revenue has been revised down. Once-off factors have contributed to the debt projections being revised upwards.

24 Oct 15:05
1. South Africa finds itself at a crossroads. This Medium-Term Budget Policy Statement highlights the difficult choices that we need to make over the next few years.

24 Oct 15:05
Madam Speaker, let me summarise my main points:

24 Oct 15:04
I am also grateful to the finance and appropriation committees, who have responsibility for steering consideration of the Division of Revenue Amendment Bill, the Adjustments Appropriation Bill, the Finance Bill and the Taxation bills.

24 Oct 15:04

I know that Members of the House will join me in expressing appreciation to:  

1. Staff of the National Treasury,

2. The South African Revenue Service, and

3. The finance family institutions.

24 Oct 15:04

I also wish to thank Provincial Premiers, Finance MECs, and Municipal Mayors, who share our fiscal and financial responsibilities.

Deputy Minister Gungubele, the acting commissioner of the South African Revenue Service, the 10th Governor of the South African Reserve Bank and the Director General of the National Treasury have been resolute pillars of support.

24 Oct 15:03

Thank you and conclusion

Madam Speaker, as I conclude, allow me to thank the President for his guidance and leadership. My appreciation also goes to the Deputy President. I would like to thank the Minister of Defence and my Cabinet colleagues, including members of the Ministers’ Committee on the Budget, for their cooperation and support.

24 Oct 15:03

Government has been working with the Johannesburg Stock Exchange to strengthen debt listing requirements for all issuers, including state-owned companies.

These proposals aim to bring about increased transparency and improved governance for SOCs, and complement other government measures.

24 Oct 15:03

To support a sustainable reconfiguration of our airline portfolio, in 2018/19 government will provide additional funding for SAA and South African Express Airways. Minister Gordhan and I are working closely to limit the fiscal cost of these measures.

By the end of the year, the boards of these two companies will present plans to strengthen and align their operations.

24 Oct 15:03

Reforming state-owned companies

Madam Speaker, our state-owned companies can spend our money better. Many of these state-owned companies need to be reconfigured.   

In the past year, almost all of the regional and domestic routes operated by South African Airways have become profitable. SAA will reduce and ultimately stop operating loss-making international routes.

SAA procurement has unlocked annual cost savings of R400 million.  Despite these efforts, SAA is still loss-making and even more radical measures need to be undertaken.

There should be no holy cows!

24 Oct 15:02
It is necessary for us as a country to face up to the events of the recent past, and learn from them. We are taking the following steps to strengthen financial management:

24 Oct 15:02
Madame speaker, among the many tweets we received from the South African public was a plea to strengthen the internal auditing capacity at our municipalities.

24 Oct 15:01

Restoring good governance and fighting corruption

We can spend our money better. Too much money goes missing. We must restore good governance and fight corruption in all of its forms.

Money that leaks out of the system is no longer available to support our efforts to reduce poverty and lighten the burden of the poor.

24 Oct 15:01

On carbon tax, we have heard the concerns of business and labour during the parliamentary hearings.

The carbon budgeting system and the carbon tax will be aligned. This is done by imposing a higher tax rate as a penalty for emissions exceeding the carbon budget.

The original date of implementation was 1 January 2019, but this will be postponed to 1 June 2019. 

24 Oct 15:01

The revenue loss associated with zero-rating these items is estimated at R1.2 billion.

However, zero-rating these products targets low-income households and restores the dignity of our people.

24 Oct 14:56

Madame speaker, I received 3 299 tweets in total. One of them is from Tintsi Ngwenya in Johannesburg, who said: “Sanitary pads should be tax free”

After considerable debate and consultation, as of the 1 April 2019, government will zero-rate the following items:

1. Sanitary pads

2. Bread flour

3. Cake flour

24 Oct 14:55
An Independent Panel of Experts investigated options to mitigate the impact of the VAT increase on lower income households. My thanks to the panel for their excellent work. I would also like to thank the 30,000 individuals and NGOs who provided comments on the Panel’s recommendations.

24 Oct 14:55
We are of the view that this will provide a much-needed boost to the real economy.

24 Oct 14:55

Madam Speaker, concerns have been expressed about the slow pace of VAT refunds. We recognise that this has hurt the cash flow of a number of companies, including small businesses.

The Acting SARS Commissioner has committed to processing the outstanding VAT refunds as quickly as possible. We estimate total additional VAT refunds of R20 billion, made up of R11 billion to clear the backlog, and an upward revision of R9 billion for the current fiscal year.

24 Oct 14:53

Revenue collections up to the end of September 2018 have grown by 10.7 per cent compared to the same period last year.

Latest estimates, however, suggest that the full year tax collections will be R27.4 billion less than expected, of which R20 billion reflects increased VAT refunds, and R7.4 billion reflects lower corporate tax and personal income tax.

Although some of the VAT refunds reflect ‘once-off’ payments, we expect revenue shortfalls of R24.7 billion in 2019/20 and R33 billion in 2020/21, relative to the 2018 Budget.

24 Oct 14:52

Around 85 per cent of the increase in the wage bill is due to higher wages, rather than headcount increases.

The national wage ceilings remain unchanged, despite the new wage agreement.

24 Oct 14:51

The wage bill remains the biggest cost pressure on the budget. Over time, wages have crowded out other goods and services and capital investment, particularly in health, education and defence.

In some cases, this has contributed to a build-up of unpaid invoices in provincial departments.

24 Oct 14:51

The 2018 public-service wage agreement exceeds budgeted baselines by about R30.2 billion over the medium term.

We have not allocated additional money for this.

National and provincial departments will be expected to absorb these costs within their compensation baselines.

The Department of Public Service and Administration will work with national and provincial departments to help them manage the implementation of the agreement, while protecting our key developmental priorities.

24 Oct 14:50
In recent budgets, we took important steps by reducing the expenditure ceiling and increasing taxes. Given the weakness of the economy, government is aiming to manage these pressures, while avoiding additional fiscal measures that could limit growth.

24 Oct 14:50
Other risks identified in the February 2018 Budget have materialised, including a public-service wage agreement significantly above inflation, and the continued decline in the financial condition of some state-owned companies, leading to requests for budget support.

24 Oct 14:50

The consolidated budget deficit is estimated at 4 per cent in 2018/19, compared with the 2018 Budget projection of 3.6 per cent of GDP.

After rising to 4.2 per cent, the deficit stabilises at 4 per cent in the outer years. Gross debt is on pace to stabilise at 59.6 per cent of GDP in 2023/24.

24 Oct 14:49

My job is to make the fiscus stronger.  

Government remains committed to its goal of stabilising and bringing down the debtto-GDP ratio. In recent months, deteriorating economic performance, revenue  13  shortfalls and a weaker rand have all contributed to higher debt projections.

24 Oct 14:47

Fiscal stance

The President’s plan is achievable. But any growth plan must be built on two macroeconomic preconditions: a sustainable fiscal position and low and stable inflation.

I am confident that Governor Kganyago and his team will continue to work tirelessly to keep inflation down. And please, let us not distract him with these regular attacks on the mandate and independence of the South African Reserve Bank.

Today we reiterate what is contained in section 224 (2) of the Constitution:

“The South African Reserve Bank, in pursuit of its primary object, must perform its functions independently and without fear, favour or prejudice, but there must be regular consultation between the Bank and the Cabinet member responsible for national financial matters.”  

24 Oct 14:44
Mboweni goes off script. He recounts a bank heist in Krugersdorp.

24 Oct 14:42
Civil society can help. In some cases, such as in Emalahleni, citizen associations have successfully challenged local government to implement the measures prescribed by law to address financial problems.

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