South African parliament to discuss medium-term budget policy
South African Finance Minister Tito Mboweni will today present the medium-term budget policy statement to parliament.
Africa’s second-largest economy has been struggling as of late, with tax collection some $18.78 billion below pre-COVID projections and a fifth of every collected tax dollar going towards interest payments on rising government debt. In June, Mboweni estimated that the nation’s debt will total 87.4% of GDP in 2024.
As a result, expect Mboweni’s announcement to include large-scale cuts in government spending in order to corral growing national debt, which will hurt South African businesses that hoped to see continued stimulus for small-to-medium enterprises (SMEs). Moreover, Mboweni’s austerity measures could impede the government’s ability to bailout its struggling airline industry. The budget proposal’s frugality is likely to be at odds with President Cyril Ramaphosa’s ambitious economic recovery plan that seeks to put $6.17 billion towards job creation over the next two years, as well as generate $61 billion in investment. As the path to economic recovery forks, South Africa must now choose whether to prioritise its spiralling national debt for fear of a last-resort reliance on sovereignty-eroding IMF contingency loans, or focus on getting SMEs back on their feet in the short term.
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