The Money Show speaks with Citibank economist Gina Schoeman about the primary budget surplus recorded for the three months ending in June.

“I would explain to you what a budget surplus is, but it’s been so long since I forgot!”

Bruce Whitfield comments on the fact that South Africa recorded its first quarterly budget surplus since 2018 (for the three months until the end of June 2021).

He discusses the September 2021 Reserve Bank Quarterly Bulletin with Gina Schoeman, economist at Citi Bank.

Schoeman points out that the figures are for the primary budget surplus.

In effect, this means your total income minus your non-interest expenses … It removes the debt service costs on the public debt from those expenses, which is why you are able to achieve this surplus if revenues are really robust thanks to something like the commodity price cycle.

Gina Schoeman, economist – Citibank

Is this then a realistic perspective of the financial health of the country?

This is realistic in the sense that this is exactly the type of primary balance you need to focus on if you are looking to stabilize debt … If you are thinking about spending, then the costs of servicing the debt are overwhelming. out of your control – the only way to really control them is through interest and that interest in itself is hard to break down unless you do the right thing.

Gina Schoeman, economist – Citibank

If you start doing the right things like trying to reduce the rest of the expense situation, then of course the side effect of doing that will reduce the interest expense per se … and [it will] prove to everyone that your plans to consolidate the fiscal position, to stabilize the debt, will start with expenditure management.

Gina Schoeman, economist – Citibank

That’s not quite what’s happening in South Africa, she says, given that it’s been a year of huge earnings in large part thanks to soaring commodity prices.

Turnover is up 61% for the period from April to June. Last year over the same period, turnover decreased by 25% given that it was the Covid year …

Gina Schoeman, economist – Citibank

It’s hard to have a realistic view that it will be sustainable, but let’s not be completely pessimistic … achievable.

Gina Schoeman, economist – Citibank

What you should be thinking about is that we had an unexpected payoff for the year and if a government is using that time to do the kinds of things that will improve their revenue collection and manage their experience afterwards, that is, t may be achievable for South Africa. .. You are going to need an acceleration of reforms and better growth … and very critically, expenditure management …

Gina Schoeman, economist – Citibank

Listen to Schoeman’s ideas below:


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