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Finance Minister Mboweni expected to deliver gloomy Budget Speech

Shortfalls in revenue collection mean Finance Minister Tito Mboweni will have to announce cuts in government spending but he must also tread cautiously so as not to affect service delivery.

FILE: Finance Minister Tito Mboweni delivers the Medium-Term Budget Policy Statement in Parliament on 30 October 2019. Picture: @TreasuryRSA/Twitter

CAPE TOWN - It will be reckoning time for South Africans when Finance Minister Tito Mboweni delivers his Budget Speech on Wednesday afternoon.

Mboweni needs money, but state coffers are bare. The question is where he will find the funds and how much pain that will cause taxpayers.

Shortfalls in revenue collection mean Mboweni will have to announce cuts in government spending but he must also tread cautiously so as not to affect service delivery.

Big elephants in the room include the public sector wage bill, and funding stricken state-owned entities like Eskom, SAA, SA Express and the SA Post Office.

It’s been billed as the most difficult Budget in the country’s post-apartheid history and Finance Minister Tito Mboweni is the man caught between a rock and hard place, with little room to move.

Demands for spending far exceed revenue and Mboweni must show the government is serious about getting its debt under control. That means reining in spending but not so much as to hurt service delivery. While sin taxes and possibly the fuel levy will definitely go up, he’ll be wary about further overloading hard-pressed consumers with higher income tax or causing a political storm by raising VAT.

In his Budget speech last year, Mboweni identified the public sector wage bill and SOEs as the biggest fiscal risks, so expectations are high – but how far he will be able to go in curbing state worker salaries or spelling out a plan for Eskom’s massive debt remains to be seen.

What Mboweni says and does today will be closely watched, not least by Moody’s, the only international rating agency still holding South Africa’s debt at investment grade. It’s due to post its review in March.

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