Medium-term budget shows it will be a long road to restore SA to financial stability

The Mid-Term Budget Policy Statement (MTBPS) was delivered under difficult economic conditions. The Minister of Finance had to present a consolidated, fiscally-disciplined package to address the deterioration in government finances, but could not make changes that would cause a pushback in an election year. The mini-budget showed tax revenue substantially behind budget, overspending of about R29 billion, mainly because of the wage increase for public servants, and a significant increase in government debt to 77.7% of GDP by 2025/26. The latter will increase the debt servicing cost to 22% of total tax revenue from 18% at present. The minister acknowledged the need to grow the economy and restructure government. However, there are no innovative ideas in this budget and nothing to indicate that government will be able to implement substantial reforms. Listen to further insights from STANLIB Chief Economist, Kevin Lings.