The Treasury has delivered by mapping a path to debt stabilisation by 2021-22 and lowering its borrowing requirement. Its positive intent and willingness to make some tough choices, including the one percentage point increase in the value-added tax (VAT) rate, are likely to be well received. The upward revisions to GDP growth revealed in the budget are reasonable, but revenue collection relies on an increase in tax buoyancy, while spending demands remain elevated. In particular, the challenge for the Treasury is to stick to the average projected increase in its wage bill of 7.3% a year over the medium term. A risk to the Treasury, other than missing its budget balance and debt level targets, is the financial position of state-owned enterprises (SOEs). While the focus has been on the central government’s debt ratio, the Treasury admits liquidity-strapped SOEs remain a concern. The 2018 Budget Review reveals that at end-March, government debt guarantees on public institutions’ debt we...

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