CAPE TOWN – The downward adjustment on South Africa’s growth expectations announced by Finance Minister Tito Mboweni when delivering the country’s 23rd Medium-term Budget Policy Statement (MTBPS) is a rather bitter pill to swallow.
The Finance Minister told Parliament on Wednesday that the country’s growth expectations now stood at 0.5 percent of gross domestic product (GDP), compared with 1.5 percent anticipated in February.
This was one of the most alarming takeaways from the MTBPS, according to Jameel Ahmad, FXTM global head of currency strategy and market research. Ahmad said this did nothing to help investor sentiment because it painted the same old picture that the South African economy would continue to underwhelm.
Mboweni was hailed for painting a true picture of the state of the country’s economy despite worries about market reactions to the country’s ballooning debt. This year’s national debt exceeded R3 trillion and is expected to rise to R4.5 trillion in the next three years.
With this year’s revenue gap predicted to be around R53 billion, the minister’s report on the state of revenue collections has painted a grim picture of the years ahead for the fiscus. With this in mind, two of Mazars’ tax experts weighed in on the key issues raised by Minister Mboweni: