HILARY JOFFE: Gordhan — or his successor — must deal with SA’s toughest fiscal dilemma yet
WHO might our finance minister be by the time the medium-term budget is presented in Parliament in about seven weeks? We can’t be at all sure at this stage. What we can be sure of, however, is that the fiscal dilemma faced by whoever it is will be tougher than ever.The bottom line is this: economic growth has fallen well short of even the muted expectations that underpinned the February budget, so revenue targets may not be met at a time in which there are added pressures on spending, widening the deficit.The question is, does the minister simply let the fiscal deficit edge up, in which case the government will have broken its promise of fiscal consolidation and a downgrade to junk status by one or more of the ratings agencies is all but certain? Or does he or she stick to the deficit targets, and to the commitment to stabilise the government debt, which means cutting spending or increasing taxes or some of each?For the current fiscal year at least, further tax increases are not an ...
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