HILARY JOFFE: Mboweni unfolds a road map - but now it must be followed

01 March 2020 - 00:00

It was a refrain in the budget review and again in the budget speech: budgets are complex but the numbers are simple. And the numbers were grim - even though it was a bold budget. Finance minister Tito Mboweni did what was right fiscally, pencilling in deep cuts to the personnel budget and calling a halt to major tax hikes. But even if the pay cuts pan out politically, the budget deficit heads towards a psychologically scary 7% and the public debt heads towards 71% and keeps climbing. If there are zero cuts, the deficit gets closer to 8%.

And the simple truth of the numbers is that, in an economy growing at just 1% a year, there are no more options. SA spent its way out of the great recession in 2008/2009 and kept spending, particularly on the public sector wage bill but also on bailing out ailing state-owned enterprises (SOEs), even as economic growth and tax collections kept falling short of budget targets...

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