CLAIRE BISSEKER: Tito Mboweni now has to pick his way through the nine circles of hell
The finance minister has overpromised on debt stabilisation but ditching it would make for terrible optics
Finance minister Tito Mboweni faces a fiscal conundrum so daunting that he has been forced to delay the medium-term budget policy statement (MTBPS) by a week. The problem is that he overpromised when he convinced the country in July that SA had to choose an “active” fiscal path that would allow debt to stabilise at 87% of GDP by 2023/2024.
This path was also sold to the IMF as the basis on which it agreed to release R70bn to shore up the 2020/2021 fiscal deficit, which is expected to be a massive 15% of GDP. However, according to work by academic economists and adopted by the president’s economic advisory council, the 87% target was never remotely feasible and, even if it were, it certainly is not desirable to cut expenditure by the required R230bn given the devastation wrought by Covid-19...