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Four things to watch in the Medium-Term Budget

Wednesday, 21 October 2015   (0 Comments)
Posted by: Author: Ingé Lamprecht
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Author: Ingé Lamprecht (Moneyweb)

What economists and tax practitioners expect to see.

Finance minister Nhlanhla Nene (pictured) will once again be between a rock and a hard place when he presents his Medium-Term Budget Policy Statement (MTBPS) on Wednesday.

With the economy under pressure and concerns about how government will balance its books, Nene will face a tough balancing act – one rating agencies will be watching closely.

But economists and tax practitioners don’t expect the minister to drop any bombshells when he takes the podium in Parliament. The MTBPS generally provides an interim update of the country’s position and finances and may shine some light on its thinking around potential tax hikes next year, but the MTBPS is generally more a policy guideline than a rule book.

1. Economic growth will likely be revised downwards

Although National Treasury in February already anticipated fairly muted economic growth during 2015, these numbers have not materialised, says Ettiene Retief, chairperson of the National Tax Policy and Sars/National Treasury Stakeholders Committees of the South African Institute of Professional Accountants (Saipa).

Economic growth projections for 2015 will likely be revised downwards from 2% in February to somewhere around 1.5%. The latter figure is more or less in line with the World Bank, International Monetary Fund and Reserve Bank’s reviewed projections.

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