'Nene must focus on slashing govt spending'
An economist says govt spending on civil servant wages and salaries is too high.
CAPE TOWN - Investec chief economist Annabel Bishop believes Finance Minister Nhlanhla Nene needs to focus on cutting the revenue allocated to government and curbing expenditure when he makes his first Budget Speech in Parliament on Wednesday afternoon.
Bishop believes the numerical rand value of expenditure is South Africa's biggest problem.
"We are spending far too much money compared to what we are earning and the issue, of course, is the current spending on civil salaries and wages." LISTEN: Investec chief economist Annabel Bishop on her expectations for the minister's Budget Speech.
LISTEN: Investec chief economist Annabel Bishop on her expectations for the minister's Budget Speech.
She says government hired a massive amount of civil servants over the last few years and this directly affects the country's budget.
Bishop also says the minister should slash government spending but it seems unlikely as it didn't work well for former Finance Minister Pravin Gordhan.
Meanwhile, chief economist at Old Mutual Investment Group, Rian le Roux, says that the most important thing to watch for in the budget is clear evidence of convincing fiscal consolidation.
LISTEN: Chief Economist at Old Mutual Investment Group, Rian le Roux.
In October last year, Nene pledged to reduce the rate of government spending to help close the gaping gap between income and expenditure.
Nene faces the most difficult speech since the dawning of democracy in South Africa more than 20 years ago as he will be stuck with tough choices.
With load shedding, labour disputes and unemployment plaguing the country's economy, it is reported that Nene will need an extra R12 billion to fund this year's budget.
Questions are now being asked whether or not the finance minister will raise taxes to make up the funds.
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