National Treasury's internal estimates show that each rand of government spending results in less than one rand's worth of additional national income. The decrease in quality of spending is one of the reasons for this inefficiency.
While commentary on the 2024 Budget Speech has been coming in fast and hard, there’s a simple figure in the cacophony of numbers being thrown around that should make everyone pay attention. According to Old Mutual Wealth Investment Strategist, Izak Odendaal, National Treasury’s internal estimates show that the fiscal multiplier is below one, meaning each rand of government spending results in less than one rand’s worth of additional national income.
Odendaal explains that the decrease in quality of spending is one of the reasons for this, as it has often been wasteful or misallocated. For instance, education gets the biggest allocation in the budget – “but clearly the country is not producing the skills it needs”
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