(4 minutes read)
· South Africa is staring at a fiscal crisis in the coming future, possibly in four year’s time, similar to the one experienced by Argentina, according to South Africa’s Finance Minister Tito Mboweni
· Mboweni’s frank remarks have touched upon the present state of the economy, challenges, growth prospects and constraints
· The economy, which was already in a recession mode prior to the nationwide lockdown that started in late March, took a further jolt on account of the pandemic
South Africa is staring at a fiscal crisis in the coming future, possibly in four year’s time, similar to the one experienced by Argentina, according to South Africa’s Finance Minister Tito Mboweni.
Mboweni’s frank remarks have touched upon the present state of the economy, challenges, growth prospects and constraints. The economy, which was already in a recession mode prior to the nationwide lockdown that started in late March, took a further jolt on account of the pandemic.
Mentioning that the economy is passing though its worst phase in the last 90 years or so, the minister said that the contraction will be between 7% and 13% this year. As a consequence SA’s debt-to-GDP ratio will widen to 81.8% this fiscal year, and possibly breach 100% by 2023-24, if no changes are made.
Incidentally, all sectors of the economy, except agriculture, contracted significantly during the second quarter of the year. The shortfall in tax revenue is estimated at R300 billion because of the depressed economy, while expenditure tends to grow phonemically on account of the pandemic and the drive of the government to spend more amidst recession.
