Business Day Spotlight
PODCAST | Economic news of the week: SA is fast approaching a debt trap
In this edition of the Business Day Spotlight, we take a look at the top business and economics news for the week, including the decline in the aviation industry and the impact of Covid-19 on the government’s ability to collect taxes.
Our host, Mudiwa Gavaza, is joined by Dawie Roodt, an economist at Efficient Group.
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This discussion starts by looking at the aviation industry. Comair, which owns Kulula.com and operates British Airways in SA, said last week it was going into business rescue and had suspended its shares from trading on the JSE.
Roodt says this development is indicative of a tourism sector in shambles. Given the cost pressures faced by the airline and its inability to fly, business rescue is probably best until it can operate again. He highlights how the business rescue of national carrier SAA has not gone as it should have because of interference from political players.
The SA Revenue Service is projecting an annual revenue loss of about R285bn based on figures for the first month of the lockdown and the impact of sluggish economic activity, commissioner Edward Kieswetter said on Tuesday.
Roodt says he fears that this issue will do more to increase SA’s budget deficit to as much as 15% to 20%.
He ends by highlighting that poverty is one of the biggest killers in the world. Getting rid of poverty is imperative for SA and the world but at the end of the day, the only way to really reduce it is by creating wealth. That can only be done by growing the economy, he says.
Discussion points also include the lack of credible economic data at the moment, an outlook for the country’s economic growth, the government’s stimulus package and exploring a more compassionate form of economics.
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• Business Day Spotlight is a MultimediaLIVE production.