South Africa: Business Leadership SA Warns of Looming Debt Crisis

opinion

BLSA congratulates Finance Minister Tito Mboweni for tackling the key question facing the nation's finances: Will we continue a decline or start a process of renewal? The minister's warning was clear - if we continue as we have, we will end up in a debt crisis that will see us lose our sovereignty to our lenders. However, the minister was only partly successful in answering it.

Business Leadership SA applauds the clear commitment Finance Minister Tito Mboweni has made to fiscal discipline that will save South Africa from a debt crisis. But we urgently need more clarity and guidance on how economic growth is going to be delivered through policy reform.

The minister faced a big ask in the supplementary Budget on Wednesday (June 24). He had to tell the market how he was going to find R130-billion to cover additional expenses for the Covid-19 fight, deal with a far weaker revenue outlook with tax collections set to be far below what he had budgeted in February, and set out a roadmap for an economic recovery.

Mboweni had already signalled how serious the financial situation was. He spoke at Nedlac of the "hippopotamus mouth" graph, with expenditure exceeding revenue...

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