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Nhlanhla Nene to present mid-term budget

The finance minister will today deliver his first ever mid-term budget policy statement in Parliament.

Finance Minister Nhlanhla Nene. Picture: Sapa.

JOHANNESBURG - Finance Minister Nhlanhla Nene will present his first mid-term budget policy statement in Parliament today.

He'll be giving the lowdown on the state of government's finances and spelling out the direction the National Treasury has planned for the next three years.

But with government spending more than it's raking in in taxes and an economy in the doldrums, Nene has a difficult job ahead.

Tax increases are traditionally only announced in the main budget in February but the finance minister might today give a hint at how he intends to find the money needed to plump up government coffers.

His big job though is to explain how he plans to keep government spending under control and pay down the country's rising debt.

Nene has appealed to state employees to tone down their wage demands but the big question is whether government will have the backbone to face down unions wanting 15 percent increases, more than double the rate of inflation.

Meanwhile, economists are urging him to make a promise that government won't increase its wage bill.

They're warning that government is running out of space in which to move, as the number of civil servants has grown over the last few years.

Wits University economist professor Jannie Roussouw says urgent action is needed.

"We really need to rein in the civil service wage bill. It is impossible to give civil servants the 15 percent salary increase they have asked for. So there will have to be difficult political manoeuvering."

FNB chief economist Sizwe Nxedlana says this problem has arisen because the economy simply isn't growing.

The Democratic Alliance has also weighed in, urging the minister to abolish foreign exchange controls.

The party's shadow finance minister, Dion George, says the move will boost economic growth.

"The archived, out-of-date foreign exchange control regime leads to a decline in investments in our economy which severely hampers growth and job creation."

The Freedom Front Plus says Nene has little room to manoeuvre when he delivers his medium term budget policy statement.

The party's leader, Pieter Mulder, says tax revenues aren't keeping up with state spending and the country is getting deeper into debt.

"Broadly I think he only has one of two choices. He must either increase taxes, that only be next year but he can already set the climate, or he must drastically cut state expenditure."

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