Finance minister Tito Mboweni at the World Economic Forum in Davos, Switzerland, January 24 2020. Picture: GETTY IMAGES/ BLOOMBERG/ GEM ATKINSON
On the spending side, though Mboweni earmarked R150bn in savings needed over the coming three years, largely from the public sector wage bill, there is doubt from the likes of ratings agency Fitch that the amount can be reached in this budget, particularly as the wage agreement between the state and labour unions stretches to April 2021.
The uncertainty around the budget hangs over the main data release due out this week: the consumer price index . In particular the question is what the January CPI, scheduled for release on Wednesday, could mean for the SA Reserve Bank’s next decision on interest rates. After remaining benign for months, food prices are expected to add inflationary pressure in January, Jacques Nel, head of Africa macro at NKC African Economics, told Business Day. Even if the “notable increase” to 4.6% materialises, it would still be around the Bank’s midpoint and “in normal circumstances this would suggest there is scope to reduce rates to stimulate economic activity”, he said.
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