Political parties have warned that the gloomy picture presented by Finance Minister Tito Mboweni on Wednesday showed the country was in a serious financial crisis.
The DA, EFF, IFP and ACDP said the situation was far worse than initially thought with debt to sky rocket to 70% of the Gross Domestic Product, the budget deficit to breach 5.9% and the public sector wage bill continuing to rise.
Had planned savings of R250 billion materialised, it would have contained this to a relatively “sweet spot” of 64%.
The only way forward now was belt-tightening, Mboweni said.
Mboweni had taken a tough stance in his mini budget, cutting salaries for Ministers and reining in State-Owned Entities, with the blessing of President Cyril Ramaphosa.
But he also indicated that the e-tolls are back a move sure to raise the ire of his opponents.
In his speech in Parliament on Wednesday, Mboweni said the government can no longer afford to give billions of rands to struggling SOEs.
He also warned that the rising debt would remain unsustainable with the debt to approach R4 trillion in the next three years.
This as unemployment reached 29.1% in a weak economy crippled by thousands of job losses in various sectors.
The mini budget statement was tabled two days before Moody’s will indicate if it is ready to maintain South Africa’s last investment-grade credit rating.
Reserve Bank Governor Lesetja Kganyago commented that should Moody’s downgrade the country tomorrow, the consequence will be felt through there will be an outflow of funds from the South African bond markets and debt costs will rise.
– Daily Voice