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Despite years of tax hikes and expenditure cuts, the Budget deficit remains wide and the government’s debt ratio continues to rise. Fiscal consolidation has not worked. Why?
This week the South African Finance Minister will outline the government’s top-level financial plan to tackle the country’s growing fiscal deficit. To avoid a further credit rating downgrade, and maintain the momentum created by a renewed sense of business confidence, the 2018 National Budget will need to explicitly outline how the state plans to strengthen the fiscus and encourage significant economic growth.
After the euphoria of President Ramaphosa’s SONA, the 2018 Budget speech due tomorrow will bring South Africa down to earth with a bit of a bump. The President said that hard choices will be needed – but making hard choices in five days is a big ask!
The South African economy has experienced undue economic pressure and decreasing investor confidence. Pressure was undoubtedly on the South African National Treasury to take active steps to address short-comings and enable growth within the local economy.
If you had to hazard a guess, when do you reckon the COFI Bill will be signed into law?