Conservative Mini Budget Builds Confidence
Rand Stable After Conservative Medium Term Budget Policy Statement
This month, Finance Minister Enoch Godongwana tabled his first Medium Term Budget Policy Statement. It has been well received and varied very little from the path set by his predecessor Tito Mboweni.
The MTBPS can sometimes herald a shift in spending plans as Government reviews how the budget plans are going verse income and circumstances. Though some income figures have shifted (like more money coming in due to better than expected tax earnings) no big changes to spending have been made.
Some Extra Income – Time To Splurge?
It seems that even though there may be an extra R120 Billion in tax coming in no plans were made to throw extra money at failing parastatals or other programs such as the stalled National Health Insurance. A rather more conservative approach was adopted which will focus more on servicing debts.
An extra R3.9 billion was however set aside (to bulk out the other R11 billion needed) for Sasria to help cover damages and claims relating to the rioting and looting earlier this year in July. An additional R3 billion is set aside to cover possible additional vaccine purchases in the next few months.
The markets reacted quite well to the mini budget and there was no significant shift in the value of the rand following the release of the MTBPS.
If You Receive a Financial Windfall
If by some remarkable set of circumstances this year you receive a bonus or some additional pay then you may want to consider not going on a spending spree. Rather you too might take a more conservative approach and use some of the additional funds to settle up some of your debts. This can greatly reduce the amount of time it will take in the future to settle your debts. This is because it is often the interest on a debt that drags out the repayment term.
If you receive a financial windfall and are in debt review always reach out to your Debt Counsellor for some practical advice on how best to split or use the funds to your benefit.
For example, you may not have been setting aside funds towards an emergency fund in case of disaster or unplanned expenses. your Debt Counsellor may advise you to use some of the funds in this way. Or they may be able to help you negotiate an early settlement discount with one of your smaller debtors. Which will then help snowball faster and bigger payments to your other creditors.