Budget 2023
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Expert warns of fiscal debt trap

Bloemfontein - The 2014/15 budget makes no real moves to improve South Africa's fiscal health, economist Dawie Roodt said on Thursday.

"South Africa's debt level is relatively high compared with other emerging economies and it is going up strongly," Roodt told a business breakfast in Bloemfontein.

"The reality is the fiscal circumstances need attention, because the path we're on is not sustainable."

If South Africa stayed on its present path the country would run into a fiscal debt trap and getting out would be extremely difficult.

"The next three years is going to be really critical."

Roodt said Finance Minister Pravin Gordhan had missed an easy opportunity to address the national fiscal problems this year in his budget speech delivered on Wednesday.

"Next year it's going to be difficult and the next year even more difficult."

However, Roodt acknowledged Gordhan had done well with the 2014/15 budget in difficult circumstances, such as in an election year.

Nevertheless, South Africans would have to brace themselves for the next three years. Roodt added that Gordhan had probably not received the political support to make the necessary fiscal adjustments to address the overall debt situation.

"It is difficult for him to implement very difficult decisions to adjust the fiscal account of South Africa."

Roodt said he was against a policy of only focusing on job creation.

"That is wrong, so very very wrong. Please, stop with that."

Jobs could not be created, but rather were the result of economic growth.

"It is easy to create jobs. You get a group of people to dig a hole, then another bunch to fill the hole again. That is not real jobs."

Economic growth was the only way anyone could create sustainable jobs, he said.

Roodt said almost anything accompanied economic growth. This included new jobs, better education and health services and even greater happiness.

"The only way forward is to grow the economy. It is the only question we need to ask."

To get economic growth, government had to trust the private sector.

"The state is at best a redistributer of wealth," he said.


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