Govt’s belt-tightening blamed for poor state of SA’s economy

Professor Mohammed Jahed was briefing a joint meeting of Parliament’s Committees on Finance and Appropriations on the medium-term budget policy statement.

A screengrab of Professor Mohammed Jahed, the director of Parliament’s Budget Office. Picture: YouTube.

CAPE TOWN - The director of Parliament’s Budget Office (PBO) has blamed the poor state of the economy on the government’s fiscal consolidation policy or belt-tightening over the past five years.

Professor Mohammed Jahed was briefing a joint meeting of Parliament’s Committees on Finance and Appropriations on the medium-term budget policy statement.

The PBO was set up in 2009 to provide Members of Parliament (MPs) with independent advice to help them oversee the government’s finances.

Jahed has urged MPs to consider the impact of the government’s belt-tightening on the economy, claiming it is to blame for the plight the country’s in.

“Fiscal consolidation has led us to the situation we’re in at this point. Low growth, revenue degeneration, (rising) unemployment and so on… and the question we’re posing in this regard, is this still the right trajectory? We’re highlighting this debate to you.”

Finance Minister Malusi Gigaba’s medium-term budget policy statement last week committed the government to continue along the fiscal consolidation path carved by his predecessors, Pravin Gordhan and Nhlanhla Nene.

Rating agencies were not convinced, with Fitch warning last week that the growing deficit and cost of debt servicing suggests a policy shift away from fiscal consolidation and that it is occurring faster than it had expected.

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(Edited by Zamangwane Shange)