Looking at the sheer quantum of debt, which stands at 70% of GDP and is projected to increase, the opportunity cost of having the current level of debt is too high. But reducing debt doesn’t instantaneously free up money, says Nolwandle Mthombeni.
For over 18 months, our economy has been a beneficiary of the providential commodities boom. The higher metals prices, coupled with rand weakness, resulted in higher revenues in state coffers. Unfortunately, even with the longest commodities run we’ve had in a decade, additional revenue has done nothing to improve the economy’s medium-term growth rate as there are always fires to put out.
The National Treasury Annual Performance Plan was tabled in parliament this month. Of interest was the introductory statement by the Minister, in which he spoke about short-term tax windfalls and how they should be firstly used to reduce the budget deficit and then fund any temporary priorities.