ECONOMY
GAVIN KEETON: Budget numbers an indictment of failure to fuel growth
The economic consequences of the ANC government’s intervention in the economy have been very damaging
Most analysis of the recent medium-term budget policy statement has focused on disclosures about the deterioration in the government’s finances. This is not surprising as the consequences are very worrying indeed. As expected, Finance Minister Malusi Gigaba announced that tax revenue would be R51bn lower than budgeted in February. Another shock was the news that the government would make no effort to adjust its spending in line with its reduced income. Spending will now be R4bn more than budgeted, so the deficit will rise to 4.3% of GDP, compared with 3.1% projected in February. Moreover, this gap will continue for the foreseeable future. Spending will rise more than inflation and tax underrecovery is likely to continue. Indeed, the statement warns that revenue shortfalls "may suggest a profound [negative] shift in the relationship between economic growth and tax collection in the years ahead".As a result, instead of shrinking to 2.6% of GDP by 2020, as previously forecast, the budg...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.