Our problem is that we spend more than we earn. It’s as simple as that.
— Tito Mboweni, Minister of Finance - South Africa
Read: 'As Mboweni started speaking the rand went weaker and weaker and weaker'
Finance Minister Tito Mboweni painted a grim picture of South Africa’s rapidly deteriorating finances in his Medium-Term Budget Policy Statement (MTBPS) on Wednesday.
As he started speaking, the rand began falling, losing almost 3% of its value – the steepest decline in well over a year.
The bad news – skyrocketing debt, low growth and huge shortfalls in tax collections - kept on coming.
Despite being broke, and notwithstanding a spiralling wage bill, the government still gave its employees salary increases of 2.2% above inflation, on average.
Government debt now threatens to top 70% of GDP while Mboweni expects the national debt – a mountainous R3 trillion – to increase to R4.5 trillion in three years.
Mboweni hinted that a fresh round of tax hikes is becoming unavoidable.
The Money Show’s Bruce Whitfield asked the following analysts for comment:
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Dondo Mogajane, Director General - National Treasury
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Professor Osman Mollagee, Partner in Tax Service – PWC
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Ann Bernstein, Executive Director - Centre for Development
- Kevin Lings, Chief Economist - Stanlib Asset Management
Listen to the interviews in the audio below.
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