Mboweni must revive economy while trimming budget
South African Finance Minister Tito Mboweni will have to show commitment to curb spending and rein in debt in this week’s budget while finding ways to revive an economy that probably contracted the most in nine decades last year.
Mboweni will present the government’s spending framework for the next three years on Wednesday, after the coronavirus pandemic ravaged Africa’s most-industrialized economy, increasing the strain on already stretched public finances and even forcing the ruling African National Congress to end its long-held resistance to borrowing from the International Monetary Fund.
While revenue collection for this fiscal year may overshoot the Treasury’s October estimate, the pandemic has raised pressure on state coffers. The government won’t reach its goal of achieving a primary budget surplus by 2025-26, according to sixty-five percent of economists surveyed by Bloomberg. The targeted positive balance is part of the active scenario of managing public finances, which include debt that’s projected to peak at 95.3% of the gross domestic product in the 2026 fiscal year.
“In the absence of meaningful economic growth, South Africa’s fiscal strain will remain a reality for years to come,” said Elize Kruger, an independent economist.
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