In February 2020, before Covid-19 was declared a pandemic, before the latest downgrade by Moody’s and before the start of the economic fallout from the national lockdown, I stressed the urgency of producing a Budget that reduced South Africa’s debt, placed the right people in the right public roles, and widened the tax net rather than simply punishing individuals and businesses who are already tax compliant.
Sadly, if these issues were urgent in February, they are mission-critical in June. Everyone should take caution: South Africa is on a ledge and about to fall off unless we take drastic and immediate action. Covid-19, for all its devastations on lives and livelihoods, may just be the linchpin that makes us see our precarious position for what it is.Maybe. In February, Government debt was at an already unsustainable 70% of GDP and rising, with a dismal economic growth of 0.
We have also applied to the World Bank for a $50-million loan. The problem? These are all loans, not collections, and they only make our debt noose tighter.
Our emergency budget speech this week cannot prevaricate, and it cannot be another occasion to say all the right things without detailing credible and practical policy changes that the market can latch onto. We need this. Not only to stabilise our debt, but to reduce the cost of getting into debt when we need it.
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