Should we blow the budget to prop up growth?
The risk of a policy error is high as SA contemplates a fiscal stimulus package to reignite growth, but without stepping over important boundaries
Well before the recession became official, economists started debating what SA’s correct fiscal stance should be, given falling growth and rising unemployment. Should we blow the budget to prop up growth? It’s a difficult question to answer when there are multiple pressures on the national budget but very little fiscal wiggle room, the ratings agencies are circling again and the global environment has become hostile. Against this backdrop, finance minister Nhlanhla Nene is expected to pull a rabbit out of the hat with the October mini-budget. After its midyear lekgotla, the ANC said it wanted to introduce a fiscal stimulus of R43bn. It suggested tax credits for companies that create new jobs; greater fixed investment into roads and bridges, water and sewerage projects, housing and public transport; better support for emerging farmers; and an expansion of the public works programme. The National Treasury countered that R43bn could be found only through reprioritisation. There was no ...