South Africa’s Finance Minister Tito Mboweni has delivered what has been described as the toughest budget speech since the fall of apartheid in 1994.
Faced with record unemployment, a shrinking economy coupled with the devastating effects of the Covid-19 pandemic, Mr Mboweni sought to allay fears about the prospects of Africa’s most industrialised economy.
“We owe a lot of money to a lot of people,” Mr Mboweni said, highlighting the country’s escalating debt burden – which is set to rise to 90% of GDP by 2025.
The task of balancing the budget is made even harder by a $15bn (£10bn) shortfall in tax revenue collection, the biggest on record.
The good news for ordinary South Africans is that there will be no additional taxes this year.
In fact, tax brackets have been increased by 5% – the idea is that will put money directly into people’s pockets, and help stimulate economic recovery.
In the fight against the Covid-19 pandemic, Mr Mboweni allocated $700m for the procurement of vaccines over the next two years.
On the public sector wage bill – flagged by ratings agencies and international lenders as unsustainable – Mr Mboweni didn’t reveal much.
He said that government was working with organised labour to achieve fair compensation.
Opposition parties have criticized Mr Mboweni’s speech, stating it provided no clear strategy regarding how to reduce the country’s 32% jobless rate, or how to grow the economy.
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