Mini-budget: Tito’s first test of boldness
Holding the line on spending at the medium-term budget review will be Mboweni’s first test as finance minister
Any gloom about the upcoming mini-budget is overdone. Thanks to buoyant inflation, nominal GDP is outperforming expectations, as are VAT receipts. This should allow SA to escape its medium-term budget review with minor fiscal slippage and its credit rating intact. When the economy sank into a recession in the second quarter, economists warned that downward pressure on SA’s credit ratings would once again start to build. Though the pressure is indeed increasing — and real problems lie down the line, should SA fail to stage a meaningful economic recovery over the next few years — the country is not going to be tipped over the fiscal cliff at the October 24 medium-term budget review, now being delivered by newly appointed finance minister Tito Mboweni. The budget numbers are likely to hold up well for several reasons. First, it would be odd if the National Treasury doesn’t err on the side of optimism when it comes to its growth and investment forecasts, given that it has to show some f...