FISCAL STRATEGY
HILARY JOFFE: Zuma’s hunt for R80bn a perilous sortie
Chances are there will be some very dysfunctional decisions that will damage service delivery rather than cut fat
This is a very strange way to run fiscal policy. First, Finance Minister Malusi Gigaba delivers his medium-term budget policy statement in Parliament, complete with invited guests, television cameras, economists dissecting the numbers and a whole parliamentary process to respond to the budget. Then, not five weeks later, the Presidency issues a one-page media release that should have been the budget. If the process is disturbing, the numbers are even more so. In essence, the president now wants the Treasury to take more than R80bn out of an already weak economy in public spending cuts and tax hikes in 2018 — equivalent to about 1.7% of GDP. The aim is to try to stabilise the rapidly rising level of public debt at a time when growth is stagnating and there’s a giant hole in revenue collections.The trouble is that if the government doesn’t also take drastic action that enables the economy to grow faster, the fiscal measures may prove self-defeating. They might drive the economic growt...
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