ECONOMY
BRONWYN NORTJE: Keeping a lid on debt-to-GDP ratio will help assist growth
Finance Minister Malusi Gigaba sent a strong message in his Wednesday budget that the Treasury is determined to stabilise growth in public debt and rein in the ballooning debt-to-GDP ratio. Despite a revenue gap that will persist over the medium term, deep cuts in government expenditure are expected to narrow the consolidated budget deficit from 4.3% in 2017-18 to 3.5% in 2020-21. More importantly, growth in the gross debt-to-GDP ratio is projected to moderate, rising from 53.3% in 2017-18 to 56% in 2020-21. These may seem like small victories, but when compared with the forecasts in the medium-term budget policy statement presented in October, where debt-to-GDP was forecast to grow steadily from 57% in 2018-19 to more than 60% in 2021-22, this is a significant improvement.Pressure from global ratings agencies and the desire to avoid a local currency downgrade no doubt played a major role in the tough and potentially very unpopular decisions made by Gigaba in the budget, but there a...
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.