The Minerals Council South Africa has shared its thoughts ahead of tomorrow’s Budget speech by Finance Minister Tito Mboweni.
This 2020/1 Budget will be delivered in a crucial period in our country’s economic development. “The National Budget is a vital instrument for government to change the trajectory of the country’s economy and the lives of its people,” says Minerals Council CEO, Roger Baxter. He adds that it is also a vital signal to the international investor community (and ratings agencies) that South Africa understands and implements the necessary steps to put the economy back on a sustainable and higher growth path.
In a statement, the Council raised concerns relating to the performance of the economy. Over 12 years, government debt has ballooned from a comfortable 26% of GDP in 2008, to a dangerous 56% of GDP in 2019. Fixed investment, at 17.9%, is way below international norms. Unemployment, always high, is growing. Many of these fiscal and other consequent stresses are due to the poor performances of state-owned enterprises (SOEs) that were mismanaged for a decade.
The statement also suggested measures that could possibly be included in the Budget speech. Among them was urgent implementation of the Treasury strategy on the economy, measures that would address the electricity crisis and measures that would make South Africa tax competitive.
In terms of mining, the Council suggested that proposals to encourage a greenfields exploration boom in South Africa were needed. Exploration is the lifeblood of the mining sector. Treasury funding of the Council for Geoscience’s high-level geophysical mapping program is supported, and perhaps could be enhanced. In terms of encouraging the formation of more exploration venture capital in South Africa, enhancements to section 12J of the Income Tax Act and the possible introduction of a flow-through shares scheme should be considered by Treasury. “South Africa has so much potential. Correct policies with action can unleash it,” Baxter concludes.