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Finance Minister Malusi Gigaba Paints A Bleak Picture

Wednesday, 25 October 2017   (0 Comments)
Posted by: Author: Nazrien Kader
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Authors: Nazrien Kader(Deloitte)

Minister Gigaba confirmed the tight spot the country now finds itself in, with revenue shortfall reaching R50 billion, GDP growth forecasts slashed to 0.7% for 2017, and government debt to reach 60% of GDP by 2020.

As a result, there are few options open to National Treasury. Debt repayment costs are already the largest single line item on the budget, at 15%. Government’s response is to pare down the contingency reserve over the medium-term expenditure framework and maintain the expenditure ceiling. Further measures to cut into the deficit will be announced in the February 2018 Budget. “Confidence-boosting measures” and reforms would kickstart economic growth, he promised.

State-owned enterprises are developing a poor reputation and are a major fiscal risk to the country, due to government guarantees of their debt, Minister Gigaba acknowledged. A new board will be appointed at Eskom by the end of November, with a commitment to rein in irregular expenditure, while a strategic equity partner will be brought into the SAA fold.

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