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#Budget2020: Mboweni 'missed boat on debt reduction'

───   19:00 Wed, 26 Feb 2020

#Budget2020: Mboweni 'missed boat on debt reduction' | News Article

Democratic Alliance (DA) shadow minister of finance, Geordin Hill-Lewis, on Wednesday commended finance minister Tito Mboweni for some aspects of his budget speech but said the minister missed the boat regarding reining in of national debt.


Mboweni tabled the country's 2020 budget in parliament on Wednesday afternoon. 

Hill-Lewis said Treasury had "admitted defeat" by conceding that government would not meet its deficit target and that debt would not stabilise over the medium term. 

The country's debt is set to grow to 71.6% of GDP, or R4.4 trillion, by the end of 2022. 

"Minister Mboweni has often committed himself to stabilising debt. Now he has raised the white flag of surrender," said Hill-Lewis. 

"This means we will spend R229 billion this year alone on paying interest on our national debt. That is the same as we will spend on healthcare (R229 billion), more than we will spend on social grants for the poor and elderly (R221 billion) and more than double what we will spend on policing (R106 billion). This shows that unless we get debt under control, we will continue to spend more on interest, and have less and less for basic services," he said. 

The "ever-mounting debt" underscored the need for the DA’s proposed Fiscal Responsibility Bill, said Hill-Lewis, which would introduce a new legislative fiscal rule to stabilise debt by preventing government borrowing more each year without the permission of parliament. 

The DA would be tabling the Bill in parliament and calling on parties to support it, he said, adding that the deep cuts to public services being proposed were a direct result of too much debt. "Debt must come down, so that social spending can go up."

In his speech, Mboweni said the public wage bill would be cut by R160.1 billion over three years.

Hill-Lewis welcomed the move, but said there was no guarantee that the cut would materialise given that government had only just started negotiations with unions. Mboweni's "tough talk" thus lacked credibility, he said. 

"Even with this cut pencilled in, debt is still growing. That means that if the full wage reduction is not achieved, debt will be even worse than now projected."


African News Agency (ANA)

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