Finance Minister Tito Mboweni has projected South Africa’s economy to grow by just 0.5% in 2019.
Mboweni revealed the forecast while delivering the Medium Term Budget Policy Statement (MTBPS) in Parliament on Wednesday.
He said, “In short, it is a mixed picture with some positive signs. It is our job to chart a course that is strategic, sober, careful and inclusive.”
The Minister added, “The economy is now forecast to grow at 0.5% in 2019 compared to the 1.5% expected in February. Growth is projected to slowly rise to 1.7% in 2022, supported by household consumption and private-sector.”
R53 billion tax shortfall
Mboweni also said the South African Revenue Service (SARS) expects to collect R1.37 trillion in taxes in 2019.
He added, “This is R53 billion, or 4%, less than we expected.” He urged South Africans to pay their taxes.
Mboweni said non-interest spending has increased by R23 billion relative to the estimates made in February.
He said government needs “to do things differently” to manage the worsening debt and budget deficit.
He explained, “The consolidated budget deficit is now projected at 5.9% of GDP in the current year. This year, the national debt exceeded R3 trillion. It is expected to rise to R4.5 trillion in the next three years.
“As things stand, without any policy adjustments, debt will most likely exceed 70% of GDP by 2022/23. This is a serious position to be in.”
Fixing SOE finances
Mboweni sent a stern message to state-owned enterprises (SOEs), “We must also wean state-owned companies off the national budget. They must learn to stand on their own feet.”
He urged Eskom to “run their current plant and equipment better,” achieve operational efficiencies, and “fast track the separation of the utility into three parts.”
The Minister added, “Going forward, new cash flow support will no longer be equity but will be in the form of loans.”