MEDIUM-TERM BUDGET POLICY STATEMENT
EDITORIAL: Swallowing the bitter pill
‘At a debt level of 60% of GDP, a full-blown downgrade moves from a probability to a certainty’
At least there was no sad attempt to sugar-coat the pill. Delivering the medium-term budget policy statement, Finance Minister Malusi Gigaba set out the situation in all its gory detail. The two key figures were the calamitous income shortfall and, inevitably, rising debt. Government revenue is now forecast to come in about R50.9bn less than budget, which would be the worst miss since 2009. As a result, the consolidated budget deficit will widen to 4.3% of GDP against the 3.1% forecast. That’s an unexpectedly large jump, which organically leads to the second problem: Gross national debt is projected to reach more than 60% GDP by 2022, with debt service costs reaching 15% of main budget revenue. At a debt level of 60% of GDP, a full-blown downgrade moves from a probability to a certainty.
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