WATCH LIVE | Mboweni delivers medium-term budget against backdrop of falling revenue

The minister says that "green shoots" are emerging. 

"In South Africa, the high frequency data that we collect suggests that green shoots are emerging. At this stage, it looks like there will be a strong rebound in the next quarter. These will be supported by government’s Economic Reconstruction and Recovery plan."

"Madam Speaker, you are now well aware that the country’s Aloe Ferox is drought resistant, it can survive the harshest of circumstances and can certainly withstand a pandemic. Our little Aloe Ferox has survived! It is recovering!"

The Aloe Ferox is a hardy plant that Mboweni has brought to the Parliament before. 

The minister now moves on to the global economic context. 

"A sharp - and hopefully short - global recession is underway. The International Monetary Fund expects global output to contract by 4.4 per cent in 2020, before rebounding to 5.2 per cent in 2021 in their October World Economic Outlook," he states. 

"Growth in advanced economies is strengthening. Next year, emerging market countries are set to grow by 6 per cent.

"Sub-Saharan Africa is expected to rebound to growth of 3.1 per cent in 2021. As always, Africa has been at the forefront of innovative solutions to the crisis, including delivering social assistance using digital technology." 

Mboweni says Treasury is forecasting that  South African economy will grow by 3.3 per cent in 2021, 1.7 per cent in 2022 and 1.5 per cent in 2023.

This year, however, it is projecting a fall of over 7%. 

"We table a five-year fiscal consolidation pathway that promotes economic growth while bringing debt under control. The fiscal measures realign the composition of our spending from consumption towards investment and support efforts to lower the cost of capital."

He states that the state's revised fiscal framework puts SA on a course to stabilise the ratio of debt to-GDP at around 95 per cent within the next five years.

"The risks are higher," he states. 

The stock of gross debt will rise from roughly R4 trillion this year to R5.5 trillion in 2023/24.

"The economy is now expected to contract by 7.8 per cent this year, and the 2021 outlook is more uncertain," states the minister. "Job losses have been particularly severe. But we cannot allow our recent fiscal weakness and the pandemic to turn into a sovereign debt crisis."

He states the govt is setting out "active measures" to avoid a crisis. 

He now references President Cyril Ramaphosa's Economic Reconstruction and Recovery plan, saying it is "consensus-driven". 

"This particular plan is urgent and all of us should do everything in our power to implement it. "

The minister said that SA is again at a fiscal space like in 1994. 

"We must rebuild our economy, rehabilitate our public finances and recover from the devastation wrought upon us by COVID-19."

"As we rose to that fiscal challenge, so we will rise to this one."

Mboweni starts with a reference to former President Nelson Mandela. 

"Twenty-six years ago, President Nelson Mandela stood at this very spot to weave the tapestry of our newly democratic country," states the finance minister. "Freedom was only two weeks old. Madiba challenged us to: Meet despair with hope and death with a reaffirmation of the beauty of life."

"Most of us sitting in this House, I amongst them, did not know it then but Madiba was ushering in a period of unmatched social progress in our history."

As Fin24's Carin Smith has written, a key question for South Africa's airline industry - and taxpayers - is whether Mboweni throws SAA yet another bone in the form of a fresh bailout.

Mboweni and his team have had to craft the medium-term budget against the backdrop of an economy in recession, which started before the coronavirus pandemic lead to global lockdowns and a worldwide fall in trade and economic growth. 

According to the latest jobs statistics published in  September, South Africa shed 2.2 million jobs during the second quarter of the year, while quarter-on-quarter GDP contracted by a record 16.4%. 

Finance Minister Tito Mboweni will table the Medium Term Budget Policy Statement in Parliament on Wednesday afternoon.

The statement, also known as the medium-term budget or the mini budget (a description that the finance minister doesn't like to use) provides a review of state spending between April and September, setting the scene for the main budget in February. It also provides an overview of key spending plans for the state for the next three years, gives an update on tax revenue collections, and what Treasury expects from SA's economy.   

While new spending plans - such as tax increases - aren't usually announced during the medium-term budget, Mboweni can announced 'adjustments' to allocations from the main budget earlier in the year. 

This year all eyes will be on what the finance minister says about embattled state-owned airline SAA, which still needs just over R10 billion in funding for its long-delayed rescue plan to take flight. 

Mboweni is also expected to speak about cuts to state expenditure, particularly around the salaries of civil servants. Economists will be closely watching what he says about SA's mounting sovereign debt, and a projected steep fall in tax revenue collection in light of the Covid-19 pandemic and lockdowns.