The Medium-Term Budget Policy Statement (MTBPS) will take centre stage today as investors look for some positive signs in South Africa’s reform process. It will be the first budget presentation under the flag of the Government of National Unity (GNU), and an opportunity to support the narrative of fiscal reform in South Africa.. Typically, the MTBPS is an interim update rather than a full-blown policy meeting. At most, the minister will use the platform to lay the groundwork for any bigger announcements in the February budget, while providing updates on National Treasury’s latest growth and fiscal forecasts.
A stronger growth outlook may give Finance Minister Enoch Godongwana the confidence to revise fiscal metric estimates for the better, while investors will also be listening for any talk of mobilising funding for infrastructure investment from the private sector. Other than that, the government’s wage bill should come up, with further consolidation on that front likely to be welcome. It will also be interesting to see if the finance minister hints at any plans around lowering the SARB’s inflation target in the coming months, as has been touted extensively by Governor Lesetja Kganyago. On the whole, the tone and contents of the MTBPS should support SA’s fiscal reform narrative, while kicking the can down the road for any major reforms to be announced in February.