Cutting state expenditure will go a long way to defusing SA’s debt bomb
The government could raise taxes to claw back fiscal stability, but this would be self-defeating and punishing
Finance minister Tito Mboweni is, by now, putting the finishing touches to his budget, one that is being prepared in exceptionally constrained circumstances. SA’s economy is barely growing, while its citizens and businesses already hand over large proportions of their incomes to the government and state-owned entities (SOEs), doing so with increasing levels of reluctance. At the same time, pressures to spend more money — to alleviate poverty, provide essential goods and services and make good on commitments made to public servants, university students and others — are more intense than ever. The challenges are greatly magnified by the explosive trajectory of the government’s debt. SA’s debt sucks up a larger and larger proportion of the government’s revenues, slows economic growth and ensures that what growth we do have is less inclusive. Unless this is turned around and the fiscal consolidation that does this is accompanied by growth-enhancing structural reforms, SA will never get ...
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