Economist Frank Blackmore says the country’s tough economic situation will make it difficult for Finance Minister Enoch Godongwana to deliver a budget that is satisfactory to all.
Business has called for a balanced Medium-Term Budget Policy Statement (MTBPS) which will champion South Africa’s efforts to reduce the country’s debt burden.
Godongwana will deliver the policy statement in Cape Town this afternoon.
Blackmore says it will be interesting to see how Godongwana will strike a balance.
“The main issue is going to be how we are going to close the deficit, what are we going to do there. Are we going to increase taxes, are we going to borrow more, are we going to go to our contingency fund, are we going to cut costs?”
“The minister’s hands are tied with respect to an increase in taxes, given that next year is an election year and the fact that we are quite highly taxed. Borrowing is becoming more difficult which leaves cutting costs and perhaps the contingency fund to bridge the gap between spending and the revenues,” adds Blackmore.
Meanwhile, Chief Economist at Efficient Group Dawie Roodt says the country’s rising debt burden which reached around R4.8 trillion last year is expected to escalate even further this year.
He says the country’s growing budget deficit will increase government’s borrowing requirements which will come with higher interest repayment costs.
Medium-Term Budget Policy Statement I Minister must focus on other economic growth measures: Roodt: