Mini-Budget 2018 – what you need to know

Highlights (or lowlights?)

  • 2018/19 budget deficit increases to 4% of GDP from 3.6% in Feb, and grows to 4.2% in 2019/20
  • We’re spending R181bn this year to service our debt, rising to R247bn in 2021
  • The tax revenue short fall will be R27.4bn for 2018/19
  • Higher gross debt to GDP – stabilising to 59.6% of GDP by 2023
  • State owned entities are queuing up for their annual bailouts: SAA to receive R5bn, SA Post Office receives R2.9bn, and SANRAL receives R5.8bn to pay your e-Tolls (thanks Jozi)
  • Treasury has revised 2018 GDP growth down to 0.7%, with 1.7% in 2019 and 2.1% in 2020
  • White flour, cake flour and sanitary pads to join the zero-rated VAT items
  • Spending priorities remain targeted on education, health and social services


Economic stimulus plan:

This is where the positives lie, with government’s renewed drive to stimulate the economy:

  • Growth enhancing economic reforms, including a revised Mining Charter, Visa regulation amendments & restructuring electricity sector
  • An Infrastructure fund
  • Reprioritising public spending to support growth and job creation
  • Initial steps taken to reform state owned entities
    • Revived management at board level
    • Auditor-General focused on irregular spending and full audits
    • Eskom to present turnaround strategy to Government in November
    • SAA find R400 Million in procurement savings


Rand reaction:

The rand is currently 1.6% weaker, as the reality hits home for SA. Markets have not taken kindly to the ballooning budget deficit, shortfall in tax collections and revised GDP growth forecast.

The rating agencies reaction will be key, and anticipation of this may explain the rand’s negative reaction.


Source: Commentary by the E4F Dealing Desk