Faizel Patel, Radio Islam News - 31-10-2019
A chief economist has told Radio Islam Finance Minister Tito Mboweni was ringing the warning bells on South Africa’s economy when he delivered his medium term budget policy statement (MTBPS).
South Africans may be excused for feeling a little shell-shocked on Thursday after facing the reality of the deep crisis the economy is in.
The statement contained no detailed spending plans or tax proposals, which would only come in the annual Budget in February.
It was clear that although Mboweni understood the magnitude of South Africa's financial crisis, the rest of government did not.
Maarten Ackerman, Chief Economist and Advisory Partner at Citadel says Mboweni painted a very grim picture of the country’s economy.
“He called a spade a spade. He was very honest in terms of telling us exactly where we are. He was trying to speak to everybody that’s involved, from civil society, the public, trade unions, political parties to say this is the picture that will turn out over the next three years if we don’t start doing anything.”
He says Mboweni also referred to the wage bill, which has a huge impact on the economy.
“We’ve got the biggest wage bill currently relative to GDP in all OECD countries. But again there he mentioned that issue and we need to address that and that we need to talk to trade unions and see if we can get below inflation increases going forward and who know even reducing the headcount.”
Ackerman says while the Rand and the equity market took a dip, the figures delivered in the grim MTBPS by Mboweni warrants a downgrade by Moodies.
Listen to the interview with Maarten Ackerman.