BN Edge | Dawie Roodt on MTBPS: a corner turned, but for the wrong reason

Course, don't take it away from the Minister of Finance. He's really putting a lot of effort in trying to keep a lit on state expenditure. But the reason, the main reason why the fiscal deficit is coming down is because of a bit of a windfall revenue or tax receipts by the Minister of Finance. So there's an overrun in tax receipts, especially on company taxes. And also, very importantly, there's an overrun in tax receipts because SARS is being very aggressive. So you're reducing the fiscal deficit not by spending less.

You're reducing the fiscal deficit by taking more out of the economy. And in the process, you are increasing the revenue or then put differently the tax burden on the economy. The tax burden today is the highest it's ever been on a South African economy. And keep in mind that the economy is just about not growing. The Minister of Finance reduced his estimates to 1.2% economic growth. And I think that is far too optimistic. It's probably going to be less than that, which then implies that the tax to GDP is.

Ratio is likely to keep on going up a little bit. But let's give credit where it's due. Especially one specific aggregate that we've all been very concerned about has been the debt to GDP ratio. That seemed to have stabilized. And that, and I agree, it has stabilized. They are looking at the numbers so far, and it's likely to start coming down a little bit over the next couple of years. But of course, things can still go wrong, but give credit where it's due. That was a major issue. And that, by the way, is then a reason why the rating agencies.

Are looking quite favorably to the South African fiscal accounts, and there's certainly a possibility of a further improvement in the grading of South Africa's debt. We will still be junk, but probably with only one at the moment, we tore two notches into junk and all three major ones. And we probably will get a bit of an improvement on that, but we'll still be junk. So, yes, an improvement, but it's for the wrong reason, and the wrong reason is an increase in taxes, basically. And economic growth: 1.2%, perhaps on our.