Budget a tough balancing act for Tito Mboweni
Cape Town - Finance Minister Tito Mboweni has been urged to push through with reforms in the economy despite a poor fiscal outlook for the country.
Political parties and economists agreed on Tuesday that this was one of the toughest budgets Mboweni will address as the economy was tethering on the brink of collapse.
They said today’s Medium-Term Budget Policy Statement comes at the time the country is facing numerous challenges including high unemployment, low growth rate and ailing State-Owned-Entities (SOEs).
The DA said Mboweni must stick to fiscal consolidation and also cut the debt. The national debt has been increasing in the past few years.
DA MP and finance spokesperson Geordin Hill-Lewis said yesterday they welcomed reports that discussions between the government and the World Bank over the $2 billion (R32bn) loan had stalled. He said the World Bank should not grant the loan to bailout SOEs.
IFP deputy leader Inkosi Mzamo Buthelezi said the country was in a deep financial crisis and Mboweni must explain where the money will come from to fund the projects announced by President Cyril Ramaphosa in his economic recovery plan.
He said the country had no money, and Mboweni must shed light on this.
“South Africa does not have money. We need to hear from him where the money will come from to fund those projects that the president was talking about,” Buthelezi said.
In his speech Ramaphosa announced a number of measures to revive the economy, including creating 800 000 jobs, injecting R100bn in infrastructure, hiring 300 000 assistant teachers and ramping-up the economy.
Cope spokesperson Dennis Bloem said corruption was one of the major problems facing South Africa.
He said Mboweni would need to come up with a concrete plan to turn the situation around.
Bloem warned that unemployment was a ticking time bomb and said the government must address this crisis before it explodes.
Mike Schussler, a chief economist at Economist.co.za said he expects the deficit to widen from 6% projected in February to about 16% .
He said with the huge budget deficit this would create serious problems for the country. “I think we are going to see a bigger deficit of 16% and this is going to make it difficult for our finances going forward. That would mean cutting spending and increasing taxes,” Schussler said.
He said the country would also pay more interest on the debt. This would be a serious problem for the state.