[Audio] CRA commentary on the Medium Term Budget Policy Statement

In this clip, David Ansara (COO) and Ian Cruickshanks (Chief Economist) of the Centre For Risk Analysis (CRA) discuss the key takeaways of this afternoon's Medium Term Budget Policy Statement by Finance Minister, Tito Mboweni.
[Audio] CRA commentary on the Medium Term Budget Policy Statement
  1. Treasury economic growth forecasts have been revised to 0.5% in 2019 (down from 1.5% expected in February). Treasury expects growth to rise to 1.7% in 2022. Important to note here that Treasury forecasts have historically been short by a margin of 50%. CRA research therefore anticipates between 0% and 0.5% growth for 2019.
  2. The fiscal situation remains bleak. The consolidated budget deficit is now projected at 5.9% of GDP in 2019. National debt exceeded R3tn, and is anticipated to rise to R4.5tn (~50%) over the next three years. Debt to GDP could exceed 70% by 2022/23 in the absence of meaningful policy reform. On its current path, SA is headed for a sovereign debt trap.
  3. Eskom remains a systemic risk to the SA economy, with R230bn committed by government over the next 10 years. Although the Minister insisted that Eskom should be "run like a business", the utility will be unable to meet its current debt commitments without continued government support.
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