As long as the government will not make clear policy choices tailored to what SA can afford, our fiscal woes will worsen
The Treasury publishes updates on revenue and spending at the end of each month and next week’s release, for the month of June, will be closely watched. June is one of the two big corporate tax collection months . Budget watchers will be looking to the figures for an early steer on how far 2023’s tax collections will fall short of February’s budget estimates.
Added to that are higher interest rates on government debt because SA’s riskiness in the eyes of investors has risen. The bottom line is that the government is unlikely to achieve its goal of stabilising public debt anytime soon. Its interest bill keeps rising and public finances will become ever more unsustainable.
It is simply not feasible to slash spending to the extent the IMF advises. Nor is it feasible to hike taxes in an environment of very weak growth. What’s more, the budget doesn’t even factor in the government’s hugely expensive national health insurance and other policy ambitions.One bleak result is that SA has become stuck in a permanent state of what they call “austerity without consolidation”. Another is that the budget has lost its credibility.
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