Tertia Jacobs

Tertia Jacobs

Tertia Jacobs | Treasury Economist

February 2023 Budget Review

The Minister of Finance walked a tightrope in providing financial assistance to Eskom, supporting households and increasing investment spending. There was very little on economic reforms, emphasising the urgency for a shift in gears from blueprint policy documents to implementation. 
Key takeaways

  • Eskom’s cash flows improve as National Treasury provides R254bn of debt relief over the MTEF period, allowing for more maintenance and diesel.
  • Tax incentives for households and corporates amount to R4bn and R5bn, respectively.
  • Tax relief is provided through adjustment of tax brackets.
  • Expenditure is targeted with social grants adjusted for inflation.
  • A primary surplus of 0.1% of GDP is recorded in F23, a year ahead of target. Accounting changes to deal with Eskom’s financial assistance will keep the primary balance in surplus, in coming fiscal years.
  • Risks to fiscal consolidation are provided through the primary surplus and contingency/unallocated reserves in the outer years. Upside risks to expenditure in F24 are likely to see the main budget deficit closer to 5.0% of GDP than the 4.4% projection.
  • Gross debt to GDP rises by 3.6% to 73.6% in F26, owing to Eskom’s financial assistance but risks are to the upside.
  • Financing of the FY24 budget deficit:  The supply of T-bills rise, with a net increase of R48.0bn; cash balances are rundown by R93.3bn and cash raised from ILBs, SAGBs, FRN and a new rand Sukuk bond is targeted at R329.9bn from R310.9bn. A sens announcement will be released on 23 February. We think the size of the SAGB auctions could remain unchanged but will likely be raised in the October 2023 MTBPS.  

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