Economists believe Budget will boost confidence in public finances

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Some economists believe the austerity measures detailed by government in the Budget will boost confidence in public finances. It is expected to contribute towards stabilising government debt and possibly leading to South Africa averting further ratings downgrade.

Finance Minister Malusi Gigaba announced expenditure cuts and tax increases to balance the available resources with commitments. The state finds itself in a tough position with limited resources and increasing spending demands. The higher taxes introduced would be hard hitting to consumers especially those at higher income levels.

Government tried to shield the poor from the increasing cost of living. Wits Senior Lecturer Lumkile Mondi believes the measures taken will not hurt business confidence. He says it is also unlikely that Moody’s will downgrade South Africa following the budget.

Government had to make a plan regarding funding fee free higher education. This is after the Heher Commission report found that government could not afford to provide free education for all students.

In December, former President Jacob Zuma announced government would subsidise free higher education for students from poor and low income earning families. The fiscus is however not out of the woods yet as risks like the State Owned Enterprises and civil servants wage bill and uncertain economic growth remains.


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