Tito Mboweni: South Africa stands at a crossroads
The Finance Minister's Medium Term Budget Policy Statement makes a frank assessment of the trouble the country is in.
CAPE TOWN - Finance Minister Tito Mboweni says South Africa stands at a crossroads.
The Medium Term Budget Policy Statement (MTBPS) makes a frank assessment of the trouble the country is in, with lower than expected growth prospects, reduced revenue and significant threats to the economy.
But speaking in Parliament this afternoon, Mboweni has stressed the MTBPS is also based on a strong belief that the country can find a way out of its economic mess if the right path is chosen.
“We are at a crossroads. This policy statement highlights the difficult economic and fiscal choices confronting us over the medium term.”
Mboweni says South Africa cannot afford to continue borrowing at the rate it does and must stabilise and reduce its national debt – now expected to stabilise at just under 60% of GDP in 2023/24.
He says the high cost of public sector salaries must also be dealt with.
“We must choose to reduce the structural deficit, especially the consistently high growth in the public sector wage bill…”
With the recession, reduced investment and lower than expected tax revenue - partly due to R11 billion in outstanding VAT refunds – Treasury has revised this year’s GDP growth sharply downward, to 0.7% from the 1.5% forecast in the February Budget.
Mboweni says growth is expected to recover gradually to over 2% in 2021. But this depends on confidence returning and bringing investment.
READ: The full MTPBS