South Africa’s February 2018 budget is set to attract both the regional as well as international businesses and industry leaders
Finance Minister Malusi Gigaba will table the budget in South African Parliament on 21 February 2018, amid cabinet rejig speculations under the new president, Cyril Ramaphosa. The country faces further credit downgrades if the budget fails to find favour with ratings agencies, warned Agri SA president Dan Kriek.
The medium term budget policy statement- delivered in October last year- estimated that South Africa will have tax revenue shortfalls of around US$4.3bn for 2017 and US$5.8bn for 2018. By 2021, approximately 15 per cent of the government’s revenue is set to go towards paying off debt. The country's deficit is projected to be 61 per cent of the GDP by 2022.
The funding of free tertiary education and struggling state-owned enterprises (SOEs) are major considerations for the upcoming budget. SOEs such as South African Airways (SAA) and Eskom have put a significant burden on the exchequer.
According to World Bank projections, South African GDP growth will reach 1.1 per cent in 2018 and 1.7 per cent by 2020. However, taxes are expected to rise by at least US$ 2.54bn. Agri SA hopes that expenditure cuts and efficiency measures will form a significant component of the specific steps and strategies to be outlined in the budget speech.
Unfortunately, agriculture received relatively little attention in the medium term budget policy statement in October last year. Agriculture was the largest contributor to the two per cent GDP growth in the third quarter.
However, the drought situation in the Eastern, Northern, and particularly in the Western Cape remains a major risk to food production. The budget should make adequate resources available to ease the impact of the drought on farmers and to provide the necessary infrastructure to help boost agriculture’s competitiveness and subsequently improve food production and job opportunities in the sector, Agri SA recommended.