If the rand tanks and bond yields spike next week, Finance Minister Tito Mboweni's mini budget will have failed its first test. That will mean the initial assessment -- fairly or unfairly -- is that the Treasury has failed to deliver a convincing case on how it will contain South Africa's soaring debt levels over the next three years.
When Finance Minister Tito Mboweni delivers his 2020 Medium-Term Budget Policy Statement (MTBPS), or mini budget, on Wednesday 28 October, the initial response will come from the markets. Analysts and opinion writers will weigh in afterwards with thoughtful comments, but the markets will be the first acid test of its credibility.
The MTBPS casts a net over fiscal planning for the next three years.
In his emergency 2020/21 budget in June -- which replaced the February Budget the Covid-19 economic meltdown had consigned to the scrapheap -- Mboweni forecast debt would reach 87.4% of gross domestic product (GDP) by 2024, after hitting 81.8% this year, up from the just over 65% predicted in February 2020.
"A sovereign debt crisis is when a country can no longer pay back the interest or principal on its borrowings. We are still some way from...