Media release: Positive MTBPS with improved fiscal trajectory likely to boost investor appetite

POSTED ON: October 26, 2022 IN by Admin
cabinet cabinet

BLSA welcomes the 2022 Medium-Term Budget Policy Statement (MTBPS) tabled today by Finance Minister Enoch Godongwana that affirms the country’s adherence to a policy of fiscal consolidation that will lead to better growth in the future.

26 October 2022 


Positive MTBPS with improved fiscal trajectory likely to boost investor appetite 

BLSA welcomes the 2022 Medium-Term Budget Policy Statement (MTBPS) tabled today by Finance Minister Enoch Godongwana that affirms the country’s adherence to a policy of fiscal consolidation that will lead to better growth in the future. 

In his opening remarks Minister Godongwana said he aims to address the needs of South Africans and secure our future stability and prosperity. It was a difficult balancing act which, to a large extent, he met. This was a particularly difficult task given that the risks he outlined in the February budget have largely materialised. He listed these as rising inflation, tightening financial conditions and the ongoing effect of Covid-19, including the more stringent lockdowns in China and their impact on global demand and supply chains, exacerbated by the Russia-Ukraine war. 

Fiscal outlook
In this context, Minister Godongwana has done extremely well to improve SA’s fiscal trajectory – helped by a revenue overrun of R106bnR83.5bn, “largely due to improvements in corporate income tax collections, with strong receipts from the finance and manufacturing sectors”. 

This has enabled him to bring forward the target of achieving a primary fiscal surplus by one year. National Treasury now expects a primary fiscal surplus of 0.7% of GDP in 2023/24.  

Gross government debt is targeted to stabilise at 71.4% of GDP in 2022/23 — two years earlier than the February projection and at a lower level. 

Fiscal discipline is watched closely by investors and ratings agencies and BLSA believes this budget statement will support SA in rising out of sub-investment grade ratings.  

The crucial issue of addressing Eskom’s debt of nearly R400bn has effectively been pushed out to the February Budget. While not disclosing the amount, the minister did however indicate that the state could take over a bigger portion of it than expected. “While the selection of the relevant debt instruments and the method of effecting the relief is still to be determined,” he said, “the quantum is expected to be between one-third and two-thirds of Eskom’s current debt.” There would be conditions attached, he noted.  

We believe that this Eskom debt transfer will ultimately have a positive effect as it will improve the SOE’s financial sustainability, allowing it to again access funding in the markets. While this adds strain to our sovereign debt burden, it will make a significant difference to Eskom as the power utility’s debt interest debt burden will decrease, enabling it to move closer to financial stability and provide space for it to spend on vital maintenance and new energy capacity. 

State-owned enterprises
Bailouts of SOEs are substantial. Transnet is allocated R2.9bn to ensure the return of out-of-service locomotives. This will be complemented by R2.9bn from spending adjustments to deal with flood damage that affected its operations in Ethekwini. Denel is allocated R3.4bn “to support recent progress made to stabilise the entity”. This allocation will be augmented by R1.8bn in the sale of non-core assets and will unlock a committed order book of R12bn awaiting execution. 

Unfortunately there are no new measures to resuscitate SA’s dysfunctional ports and rail systems; rather the minister just outlined the measures that were already under way. The nearly R6bn in extra funding Transnet is to receive will not improve the country’s transport logistics system. 

Anti-corruption measures
BLSA fully supports the additional resources for the National Prosecuting Authority, the Special Investigating Unit, the Financial Intelligence Centre and the South African Revenue Service, “to further improve the capability of the state to investigate and prosecute sophisticated financial crimes.” In addition, Government will also publish a revised national risk assessment strategy on anti-money laundering and terror financing. 

These measures are also geared towards SA avoiding being place on the grey list by the international anti-money laundering organisation, the Financial Action Task Force.  

Minister Godongwana outlined the other measures government was taking to combat corruption, particularly aimed at procurement and financial accountability. He said government was adopting “best-practices in the procurement of goods and services, including the highest standards of transparency in the tendering processes”. The Public Procurement Bill was aimed at enhancing transparency, integrity and to promote the use of technology for efficiency and effectiveness in public procurement. 

Public sector wage bill
Shortly before the MTBPS was tabled, Public Service & Administration Acting Minister Thulas Nxesi gave Treasury the green light to endorse a final 3% wage offer for public servants. Even before Nxesi’s announcement, teacher unions settled for a 3% increase but the offer was rejected by other Cosatu unions, including Nehawu and Popcru leading to a declaration of a dispute at the Public Sector Bargaining Council. BLSA lauds the minister for sticking to the 3% increase plus the extension of a R1,000 non-pensionable cash allowance. Consumption expenditure remains excessive and it needs to be tightly controlled for SA to meet the fiscal trajectory outlined above.  

Social relief
As we expected, Minister Godongwana provided for an extension of the R350 per month social relief of distress (SRD) grant – however, we will have to wait until the main February budget for a final decision as well as news on any funding mechanism.  

Infrastructure investment
BLSA is encouraged by the minister’s mention of Regulation 16 which governs public-private partnerships (PPPs). These are key enabling mechanisms for the private sector to invest in public infrastructure and reforms to make PPPs more usable would be welcome. 

However, we are disappointed that National Treasury has had to pull back R4.2bn from the Infrastructure Fund as it has not been able to invest it – though it promises it will add it to a future year. 

Over the medium term, government consolidated spending on building new and rehabilitating existing infrastructure will increase from R66.7b in 2022/23 to R112.5b in 2025/26. This includes roads, bridges, storm-water systems and public buildings. This makes spending on capital assets the fastest growing item by economic classification.  


BLSA views the MTBPS as showing that South Africa is making progress and that the ship is turning around, although very serious challenges remain in our quest to build an efficient, growing economy that is able to create jobs.  We eagerly await more detail in the February main budget. Implementation is of course vital, but that is something that requires the whole of government to deliver. 

  • This article was updated on 27 October 2022, correcting the revenue overrun figure. 



For more information, please contact:

Tumelo Muteme

Internal Communications and Media Relations Manager

Tel: 011 356 4650 / 076 538 8502 Email:

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