News24
26 Jun 2020, 01:40 GMT+10
Greece, Zimbabwe, post-war Germany: How Mboweni sees SA if urgent reforms aren't rolled out
Some economists in the country agree. Johann Els, chief economist at Old Mutual, said the Finance Minister made no mention of any policy changes to fast track the fiscal consolidation mentioned in the budget.
"Apart from a reference in the speech that the State will be implementing policy changes highlighted in Treasury's 2019 policy document, no new policy measures to address growth were announced, which in my view was very disappointing," said Els.
Instead, Mboweni revealed that SA's gross tax revenue is expected to fall by R304 billion or 6% of GDP this year compared to the previous fiscal year. A shrinking tax base as more people lose their jobs during the current lockdown means that fiscal consolidation through increased tax revenue will be a challenge for the country. As such, government will need to reign in the deficit through spending cuts, said Els.
Moody's said the speed at which the government recovers its revenue intake and curbs the debt spiral will drive SA's creditworthiness.
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