Mboweni sticks to his guns in a bid to stabilise debt, but this may not be enough to avoid the fiscal cliff.
Left leaning economists and trade unions urging the government to throw caution to the wind and spend more in an effort to boost economic growth will be disappointed as Finance Minister Tito Mboweni sticks to his guns in a bid to stabilise debt.
However, economists urging fiscal restraint will not be satisfied either, as Mboweni bowed to pressure and stumped up the R10.5-billion required to recapitalise SAA.
In other words, it is the typical middle-of-the-road budget the country has come to expect as the ANC tries to juggle ideology with fiscal prudence.
In the meantime, debt continues to rise and the date at which debt stabilises is pushed ever further out.
In June, National Treasury estimated that gross debt would reach 81.8% of GDP in the current year, or R3.9-trillion, up from 63.3% or R3.2-trillion in February. This figure remains constant.
But from there it deviates from June projections. By the end of 2022/23, gross loan debt is now projected to tip the R5-trillion mark (90.1% of GDP), rather than the R4.83-trillion, or 86% of GDP projected.
And…