Budget: Warning — tax hikes loom
The MTBPS sets out a tight fiscal road map towards achieving debt stability. But the challenge is enormous, given the sharply rising interest bill, insatiable social demands and struggling state-owned enterprises. Add in the 2024 elections and what could possibly go wrong?
Financial markets were happy with last week’s medium-term budget policy statement (MTBPS), viewing positively its bid to double down on spending cuts to achieve debt stabilisation over the medium term. Civil society organisations hated the budget for the same reason.
Most economists sit somewhere in the middle. While they are pleased the National Treasury has stuck to its guns on fiscal discipline, given the scary scaling up of debt service costs, many view the aggressive expenditure cuts proposed as implausibly large and politically fraught. ..
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