Mid-term budget review

Finance minister Tito Mboweni presenting his medium-term budget policy statement (MTBPS) reminded us that the country’s Aloe Ferox is drought resistant, it can survive the harshest of circumstances and can certainly withstand a pandemic. Our little Aloe Ferox has survived he exclaimed! But this mini budget was far from good enough to avoid a debt trap and, combined with the Reconstruction and Recovery Plan that also fell short of what is needed in South Africa at this point in our history, the risks have increased significantly.While Treasury has encouragingly strengthened the proposed Wage Bill cuts, slippage in planned non-wage expenditure cuts from the June Supplementary Budget raises serious concerns about whether SA will be able to avoid a fiscal cliff. This year 57% of our taxes will go to fund public sector workers who have been largely kicking back at home contemplating their state retirement packages. The risk we are facing as an economy is highlighted in the abandonment of the active scenario that was presented in June as the only way to avoid a debt trap. With the debt ratio expected to peak even higher (95% vs 87.4% in June) – and with clear upside risks – the fiscal cliff is getting ever closer. Listen to all the reactions from
Judge Dennis Davis, Davis Tax Committee
Zwelinzima Vavi, secretary general of Saftu
Martin Kingston, Deputy vice president of Business Unity SA
Peter Attard Montalto, head of capital markets research at Intellidex
Nazmeera Moola, head of SA investments, Ninety One
David Morobe, Executive General Manager: Impact Investment at Business Partners
Prof Jannie Rossouw, interim Head of Wits Business School
Mark Haywood, Section27