Fiscal pressures are mounting, warns Treasury official
Without stimulus measures the national budget projections tabled in February will need to be changed
SA was in a tough position fiscally and without additional measures to counter the low economic growth, lower than expected tax revenue and higher debt a change would be necessary to the projections made in the national budget tabled in February, acting deputy director general of Treasury’s budget office Ian Stuart said Thursday.
Any changes would be reflected in the medium-term budget policy statement to be tabled by the Treasury in October.
Since the tabling of the budget the economy recorded a 3.2% decline in the first quarter, pressures have mounted on debt and tax revenue for 2018/2019 was R15bn lower than expected in the February budget — one of the sharpest reductions seen historically.
Stuart said the growth outlook over the medium term was likely to be lower.
It was within this context that debt stabilisation measures would have to be considered. Expenditure and possible tax increases were being examined with “all options on the table”, Stuart said. The effects of these options on growth was a key consideration in this exercise.
Statistics SA numbers suggested that growth would have to be revised downwards this year and without fiscal measures to offset that debt would have to increase to close the gap between revenue and expenditure, Stuart said.
He said a number of pressures had emerged to threaten the Treasury’s projection of a ratio of debt to GDP of 60% over the medium term.