Finance Minister, Tito Mboweni issued a cold warning Wednesday in his Medium Term Budgetary Framework (MTBR), and said if action is not taken urgently, South Africa could end up in a debt trap, with rising interest payments on debt, higher interest rates and even higher unemployment. This admonition comes amid a sharp lower adjustment in the expected economic growth for this year – from 1.5% in February’s budget to just 0.5%.
Minister Mboweni painted a dark picture, but not as dark as it should be, economists say.
Rating agencies may welcome its offering, and markets may be somewhat upset about its view of certain aspects of growth and debt burden.
But it also ends there, because the same agencies and markets may react negatively because Mboweni provided a clear lack of broader details on how all the chaos would be reversed.
A shocking interim budget has hit South Africa because with a promise of a budget and growth that is 2% higher over the next three yea
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