Finance Minister Trevor Manuel is not expected to announce major tax cuts when he unveils the 2004/2005 Budget tomorrow.

Economists yesterday all agreed the finance minister was likely to focus on pro-growth spending to tackle job creation and crime, with tax cuts low on his agenda.

Econometrix economist George Glynos said he was not expecting any "fireworks" with regards to tax cuts.

"Revenues have been down, so he hasn't got the same room to offer tax breaks".

Sanlam Investment Management chief economist Jac Laubscher agreed, saying major tax breaks were not on the cards as the government focused on "consolidation".

However, he was expecting some clarity on how government was proceeding with the review of tax on savings and retirement funds.

"I don't expect any changes this year because they have indicated that the research they are busy with will continue this year. But hopefully we'll have some clarity on how government sees things moving forward".

Absa chief economist John Loos said there was not much scope for tax cuts.

"The risk to revenue make it unlikely that we can expect any real reduction in the major tax rates".

Glynos said the Budget would be a "pro-growth" one, focusing on job creation, infrastructure development, crime and Aids.

"It will focus on the things that everyone is worried about. It will be as populist as it can be, given the state of tax collection and revenue".

Laubscher agreed, saying President Thabo Mbeki had made it clear, during his state of the nation address, that poverty relief and job creation were the government's major priorities.

He said he expected an announcement on increased spending to improve transport infrastructure.

The other major issues were the relaxation of exchange control and the tax amnesty process, which offers protection from prosecution to those who come clean on having moved money offshore illegally.

Loos said although it was a good time to make an announcement on the relaxation of exchange controls, government was unlikely to do so until the amnesty process was complete.

"From the point of view of the current value of the rand, now would be a good time to make extensive announcements regarding exchange control relaxation.

"However, we believe government would first want to complete that amnesty process currently under way, a process, which could prove to be a significant source of revenue in these tough times," he said.

Glynos was also not expecting major announcement with regards to exchange controls.

"As a direct result of the amnesty inflow not being known, I don't think the Treasury will relax exchange controls. They are going for a gradual relaxation... which is pretty much in line with what he's done up to now".

Investec investment strategist Brian Kantor said Manuel should either finish his exchange control reforms in one "big bang", or set out rules for the next decade.

"I think exchange control is an affront to human dignity. What you do with your savings should be your business".

He said the uncertain exchange reform process was one of the reasons the rand had been so volatile, and this uncertainty made running a business very difficult.

"Let us get this process over with - it is very destructive".

Glynos said that thanks to the medium-term budget framework, no surprises were expected in tomorrow's Budget.

"No fireworks are expected. We know the stance government is taking ... everyone knows the situation".

He would be watching to see if Manuel made any announcements about government's privatisation programme, and plans to speed up the process.

Laubscher said he did not expect any announcements on privatisation.

"Privatisation has moved almost to the back burner.

Internationally there has been a shift in thinking about privatising government assets for the sake of it.

"Governments are careful of unwanted side effects when it comes to affecting service delivery to the poor. As far as raising new revenue through privatisation, I don't think we'll see anything major in the Budget".

He said the current financial year (2003/2004) was likely to end with a shortfall.

"The base for going into next year will be lower... they will have to be a bit more conservative on revenue assumptions".

Meanwhile, the People's Budget Campaign said Manuel should do more to address unemployment, poverty and inequality, all of which prevented economic growth.

In particular, the people's budget argued that greater government spending was needed to speed up land reform, expand housing and infrastructure for the poor, and extend social grants by introducing a basic income grant (BIG).

More rapid increases in spending were needed to overcome the backlogs left by apartheid.

In addition, the formal sector had to be restructured towards job-creating industries. – Sapa.