- President plans to increase tax revenue by R15 billion and cut spending by R25 billion
- Standard & Poor’s (S&P) downgraded the country to junk status on Friday
- Moody’s placed South Africa on review
President Jacob Zuma has instructed Finance Minister Malusi Gigaba and the presidential fiscal committee to find additional revenue and spending cuts to address the R40 billion budget shortfall.
This comes after Standard & Poor’s downgraded South Africa’s currency on Friday. Worryingly Moody’s has placed the country under review for a possible downgrade after the 2018 budget address.
President Zuma wants Gigaba to find an additional R15 billion in tax revenue and find R25 billion in government spending cuts. This plan will see government spending cut by R50 billion in 2018 in a desperate attempt to stop debt ballooning to above 60% of GDP.
Briefly.co.za discovered that Zuma had instructed Gigaba and the fiscal committee to concentrate on four key areas which he hopes will prevent a downgrade by Moody’s.
These include identifying and finalising proposals for spending cuts amounting to R25 billion, identifying and finalising proposals to increase revenue by R15 billion, developing a phased implementation plan for free higher education and identifying proposed economic stimulus measures aimed at kick-starting the stalled economy.
The President is scheduled to meet with Gigaba and the fiscal committee later this week for updates on his instructions.
Economists have warned that a Moody’s downgrade could lead to capital outflow of over R100 billion and would be disastrous for the country.
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