BusinessLive reports that Finance Minister Tito Mboweni’s first major policy statement since returning to the cabinet almost halved the treasury’s growth forecast, while predicting a steady increase in debt and borrowing that may attract unwelcome interest from ratings agencies.
But, Mboweni also tried to strike an optimistic tone, even as he acknowledged the grim economic reality, saying the statement was “built on a strong conviction that SA can be renewed”. He stood his ground on fiscal discipline, maintaining the expenditure ceiling and providing no extra funding for unbudgeted public sector wage increases. The state now expects the economy to grow 0.7% in 2018, compared with the 1.5% prediction presented by former finance minister Malusi Gigaba in February. Even the good news came with a health warning. An 11% increase in tax revenue collection in the first six months of the year was achieved on the back of a backlog in VAT refunds, creating “an overly optimistic view of revenue growth”. The government will not allocate additional money to fund above-inflation wage increases agreed with public sector unions this year, which were R30bn above budget. Departments will have to fund them themselves, which will probably mean less money for services and investment. Higher wages, rather than the hiring of new workers, accounted for about 85% in the wage bill, Mboweni said.
- Read this report in full at BusinessLive
- Read too, No tax hikes proposed for 2019 in medium-term budget, at BusinessLive
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