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Experts question Treasury’s ‘too generous’ economic growth projections

The estimates came under scrutiny during public hearings on the Budget hosted by Parliament’s finance committees on Wednesday.

FILE: Picture: Supplied.

CAPE TOWN - Treasury’s forecasts for economic growth and revenue have been called into question, with economists and tax experts warning of the risk of a credibility gap if these are consistently overestimated.

The estimates came under scrutiny during public hearings on the Budget hosted by Parliament’s finance committees on Wednesday.

Professor Jannie Rossouw of the Fiscal Cliff Study Group was scathing about Treasury’s too generous projections for economic growth: “The forecasts are really bad; they make weather forecasters look good.”

Rossouw warned that if growth does not pan out according to Treasury’s forecast, the debt to gross domestic product (GDP) ratio will be headed for 100% and the deficit before borrowing could go over six percent of GDP.

PricewaterhouseCoopers’ Kyle Mandy says revenue collection has been consistently overestimated in the past five years and especially during the last three years.

“Never mind forecasting around economic growth. The crux of the matter is it’s around the credibility of forecasting our tax revenues. So, we’re concerned that we no longer have credibility in that space and what that might mean from a rating point of view as well.”

Treasury will respond to Wednesday’s submissions on Friday.

(Edited by Zamangwane Shange)

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