South Africa’s Finance Minister, Enoch Godongwana, will table his national budget on 21 February next month.
The country’s finance boss will have a tough task ahead of him as he tries to get the nation’s finances in order.
The Medium-Term Budget Policy Statement (MTBPS) that was presented in November last year painted a gloomy picture.
Professor Raymond Parsons, North-West University Business School in his economic review of the year ahead, said, “Another source of uncertainty for the economy has been the serious deterioration in South Africa’s public finances which was captured in the MTBPS. Several of the serious risks facing the fiscal outlook acknowledged in the MTBPS still await to be addressed in the main Budget in February.”
Parsons further added, “On the fiscal front the danger to be avoided is that the combination of weak growth, unfunded spending pressures or the emergence of contingent liabilities could increase borrowing costs, and crowd out both private and public investment. The fiscal balance needs to be restored in the Budget without having to resort to unsustainable borrowing or damaging tax increases.”
Parsons had also said government bailouts to struggling state-owned enterprises remained a persistent problem.
Parsons said a long-range fiscal plan was, therefore, now needed to steadily wind down spending and debt and bring them under control in a way that establishes clear priorities for the future.
“Fiscal policy will inevitably have to be pragmatic and realistic to deliver sensible trade-offs in order to project a credible medium-term budget that offers more predictability and certainty,” Parsons said.