Mboweni calls for action to avoid IMF help

Finance Minister Tito Mboweni said yesterday SA had to act swiftly on its debt levels to avoid having to turn to the International Monetary Fund (IMF) for help – a day after his bleak medium-term budget speech rattled markets.

“Whether or not you like the IMF, ideologically or practically, it doesn’t matter. When you get into a debt trap that’s where you end up,” Mboweni told lawmakers.

“That low economic scenario has reduced tax revenues. We clearly have a problem.”

The Treasury expects government’s gross debt to stabilise at 59.6% of GDP by 2023/24 from an estimated 55.8% in the current year. Tax revenue is expected to underperform significantly in the three years to 2020/21.

Analysts say ratings agencies are likely to take a dim view of the latest budget projections.

Moody’s is expected to review SA’s rating in the coming weeks.

S&P Global Ratings and Fitch already rate South Africa’s foreign-currency debt as “junk” status.

When you get into a debt trap that’s where you end up. Tito Mboweni Finance minister on SA debt and the IMF