CLAIRE BISSEKER | Tito’s on a tightrope over hell ... and he’s got SA on his back

The finance minister has overpromised on debt stabilisation, but ditching it would make for terrible optics

2020-10-20 12:00:00 PM

The finance minister has overpromised on debt stabilisation, but ditching it would make for terrible optics

The finance minister has overpromised on debt stabilisation, but ditching it would make for terrible optics

Claire BissekerFinance minister Tito Mboweni faces a fiscal conundrum so daunting that he has been forced to delay the medium-term budget policy statement (MTBPS) by a week. The problem is he overpromised when he convinced the country in July that SA had to choose an “active” fiscal path that would allow debt to stabilise at 87% of GDP by 2023/2024.

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This path was also sold to the IMF as the basis on which it agreed to release R70bn to shore up the 2020/2021 fiscal deficit, which is expected to be a massive 15% of GDP. However, according to work by academic economists and adopted by President Cyril Ramaphosa’s economic advisory council, the 87% target was never remotely feasible and, even if it were, it is not desirable to cut expenditure by the required R230bn given the devastation wrought by Covid-19...

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LUKANYO MNYANDA: SA trots out a familiar approach: politics first, then paying for itBut finance minister Tito Mboweni is unlikely to throw caution to the wind and embark on a borrowing spree

LUKANYO MNYANDA: SA trots out familiar approach: politics firstBut finance minister Tito Mboweni is unlikely to throw caution to the wind and embark on a borrowing spree