(Bloomberg) -- South Africa’s medium-term budget – the first since the formation of a new coalition government in June – focused on luring investors for infrastructure projects, but an increase in spending and lower-than-anticipated revenue meant the budget deficit exceeded forecasts.
Here’s a rundown of who will be impacted by Finance Minister Enoch Godongwana’s budget update:
Winners
- Infrastructure Companies
The government plans to designate investment in roads, ports and utilities as a “standalone asset class” and introduce infrastructure investment trusts. Spending on capital assets is set to jump almost 11% in the next four years as the government buys equipment for large projects. New public works are likely to boost demand for cement, steel and other building materials.
- Water Users
The government intends increasing investment in bulk water, sanitation infrastructure and efficient water-management strategies. It will also implement a new water-pricing strategy.
- Transnet
The struggling state-owned operator of the nation’s ports and freight-rail system may be in line for government support if it sells non-core assets and explores project financing, concessioning and joint ventures to fund new projects and maintain existing ones.
- The Democratic Republic of Congo
South Africa’s military will be allocated 3.5 billion rand ($198.9 million) to fund a peacekeeping mission in eastern Congo, where rebel groups have been wreaking havoc.
- Senior Civil Servants
The government has reinstated a program that will enable state workers to take early retirement and has set aside 11 billion rand over the next two fiscal years to fund it.
- The National Roads Agency
The Treasury will repay 3.2 billion rand owed by South African National Roads Agency (SOC) Ltd. to compensate it for losses stemming from a scrapped freeway tolling project in the central Gauteng province.
Losers
- Bond Investors
The government’s consolidated budget deficit is forecast to widen to 5% in the year ending March 31, exceeding the Treasury’s 4.5% estimate in February. The government also intends taking on more debt than previously planned in the next two fiscal years.
- Eskom
The embattled electricity utility, whose shortcomings caused daily power cuts until earlier this year, risks losing 2 billion rand of government aid if it fails to sell its financing unit by March 31.
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