More spending is not the way out of low growth, says Mboweni
The finance minister says believing ‘we can spend our way out of low growth’ is not supported by any evidence
Finance minister Tito Mboweni says critics of his supplementary budget are driven by a “misguided” belief that SA can borrow and spend itself into prosperity, despite overwhelming evidence to the contrary.
In an article in Business Day (https://www.businesslive.co.za/bd/opinion/2020-07-14-tito-mboweni-structural-reforms-not-spending-are-the-best-way-to-achieve-growth/), Mboweni said growth in government spending in recent years has instead raised risks for the economy and increased SA’s risk premium. That has boosted the country’s borrowing costs, discouraged private-sector investment, and constrained the ability of the government and state-owned enterprises to spend on infrastructure, he said.