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.
