The budget balancing act
After years of overspending on a burgeoning government in a low-growth environment, SA’s fiscal maths no longer adds up. Pulling the fiscus back from the brink will mean lashings of pain all around
The Jacob Zuma administration has backed SA into a fiscal crisis and if the status quo is allowed to continue the country will be in debt distress within a few years. Finance minister Malusi Gigaba shocked the nation with this revelation when he laid all SA’s fiscal cards on the table in the October medium-term budget last year. The rand nose-dived in response, S&P Global Ratings immediately junked SA’s local-currency rating and Moody’s put the country on a three-month review for a downgrade — a period that ends just after the 2018 national budget is presented on February 21. So it’s no exaggeration to say that the upcoming budget is where the buck finally stops. "This year’s budget speech is expected to be a real show stopper — a watershed year for tax hikes given the projected budget deficit of around 4.5%," says Deloitte managing partner Nazrien Kader. "Gigaba has a tough job on his hands as he will have to negotiate multiple, sometimes conflicting, priorities." For the past five...
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