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By Siyabonga Mkhwanazi 
2h ago
Cape Town – Finance Minister Tito Mboweni has painted a bleak outlook for the economy as the government tries to maintain fiscal sustainability amid rising budget deficits and debt service costs.
Mboweni told parliament, during the Medium Term Budget Policy Statement (MTBPS) on Wednesday, that the government would have to control spending, reduce the public wage bill, cut debt and boost growth in the economy.
In a fiscal outlook for the next five years, Mboweni warned that the debt would reach 5.5 trillion rand. This is an increase of R3.9 billion.
“Our revised fiscal framework puts us on the path to stabilizing the debt-to-GDP ratio at around 95% over the next five years. The volume of gross debt will increase from approximately R4 trillion this year to R5.5 trillion in 2023/24. “
However, to maintain debt stabilization, the government would have to cut costs. It is projecting a reduction in the public sector wage bill by R300 billion over the next four years.
Mboweni also announced that SAA would get another ransom, of R10.5bn. This is in addition to the R16.4 billion previously awarded to the airline. Mboweni said the money was for the business rescue process.
But he warned on Wednesday that the debt would lead to a major financial crisis in the country if it was not contained. Debt service costs have skyrocketed to more than R233bn.
Mboweni also announced that the Zondo State Capture Commission of Inquiry would get an additional R63million to finish its work.
He said the R350 unemployment subsidy will be extended for a few more months. The government would need an additional 6.8 billion rand for the grant until the end of January.
However, he said there would be no more supplements for the other grants.
Mboweni said the public sector wage bill should stabilize. The wage bill currently stands at more than R680bn, and Mboweni said this should be contained. He said that the Minister of Administration and Public Service, Senzo Mchunu, would have to negotiate with the unions.
However, Cosatu said he would not take this seriously and would oppose Mboweni’s plan to freeze the salaries of public servants, and would only accept a freeze on the salaries of cabinet ministers, provincial MPLs and councilors.
“It was an unnecessary proposal or idea because he knows that salaries in South Africa are negotiated. If we say now, how do you take it forward? Our position is that we reject a salary freeze for public servants, ”said spokesperson Sizwe Pamla.
Political Bureau
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