{"id":446710,"date":"2020-11-06T19:13:29","date_gmt":"2020-11-06T17:13:29","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=446710"},"modified":"2020-11-06T19:13:29","modified_gmt":"2020-11-06T17:13:29","slug":"budget-cuts-wont-stifle-growth-in-south-africa-treasury","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/446710\/budget-cuts-wont-stifle-growth-in-south-africa-treasury\/","title":{"rendered":"Budget cuts won’t stifle growth in South Africa: Treasury"},"content":{"rendered":"

South Africa\u2019s National Treasury has refuted claims that planned spending cuts announced in last week\u2019s medium-term budget are austerity measures that could hamper the recovery of an economy ravaged by the coronavirus pandemic.<\/p>\n

Proposals to reduce expenditure by about R300 billion\u00a0 ($19 billion) over the next three fiscal years drew criticism from politically influential labour groups, civil society organizations and some opposition lawmakers, who argue the country should spend its way out of the longest recession in almost three decades.<\/p>\n

That\u2019s despite a debt burden that has more than doubled over the last 10 years.<\/p>\n

South Africa\u2019s overall fiscal stance has been expansionary over the last decade, even as budget allocations to some departments and institutions may have been reduced, said Edgar Sishi, the acting head of the budget office.<\/p>\n

\u201cIf you were already increasing debt over a 10-year period and you didn\u2019t get economic growth from doing that, why will doing that over the next period cause economic growth to come?\u201d Sishi said Friday in a presentation to lawmakers.<\/p>\n

Unproductive spending<\/strong><\/p>\n

Reducing spending is critical to Finance Minister Tito Mboweni\u2019s plans to target a primary budget surplus in 2026 fiscal year, when debt is expected to peak at 95.3% of gross domestic product.<\/p>\n

Both these goals have been pushed out by two years. That shows the impact of ongoing discussions in the Treasury and with its partners about the potential steps and speed with which it should address the public debt burden, Sishi said.<\/p>\n

\u201cWe are, if we don\u2019t do anything, on a path to a sovereign debt crisis,\u201d he said.<\/p>\n

\"\"<\/a><\/p>\n

Recent Reserve Bank research shows South Africa\u2019s fiscal multiplier – a ratio used to measure changes in national income relative to government expenditure – fell to less than zero in 2019 from 1.6 a decade earlier, suggesting the economic benefits of higher public spending decreased, and may have been exhausted.<\/p>\n

Steps to narrow the budget gap and stabilize debt, along with structural reforms, are more likely to support growth than continued spending funded by higher borrowing and increased taxes, the Treasury said in the medium-term budget.<\/p>\n

The past decade was the worst for South African economic growth, with total output expanding by 15.9% from the first quarter of 2010 to the final quarter of 2019,<\/p>\n

\n

Read: You only have one shot to dispute your SARS tax assessment<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa\u2019s National Treasury has refuted claims that planned spending cuts announced in last week\u2019s medium-term budget are austerity measures that could hamper the recovery of an economy ravaged by the coronavirus pandemic.<\/p>\n","protected":false},"author":59,"featured_media":410527,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[26],"class_list":["post-446710","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/446710","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=446710"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/446710\/revisions"}],"predecessor-version":[{"id":446714,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/446710\/revisions\/446714"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/410527"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=446710"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=446710"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=446710"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}