What's needed to avoid IMF take-over – Mboweni

Finance Minister Tito Mboweni says SA may be forced to approach the International Monetary Fund (IMF) if fundamental budgetary changes are not urgently introduced. SA is facing a sovereign debt crisis in 2024, said Mboweni, meaning that debt will be higher than GDP and that the government will be unable to fund its budget, reports BusinessLIVE. Calling for structural reforms, Mboweni said going to the IMF for assistance in the context of a sovereign debt crisis would mean that the fund would take over the country, including the public service and pensions, and would impose structural reforms. 'A sovereign debt crisis is a very serious matter and we are looking at it in the eye if we do not redo our budget and if we do not manage our finances carefully. We can no longer spend the way we were spending before, we can no longer do things we hoped to do before,' he said. 'The situation has radically changed; therefore we need to refocus our attention and begin to seriously consider the zero-based budgeting system, which basically means that we start with clearly articulating our priorities and allocating funds according to our revenue base, avoid borrowing to fund the gap, and live within our means. We will need to make some very serious and unusual changes to the budget,' Mboweni said. 'We must start from scratch, prioritise infrastructure and growth-enhancing (activities) and try to reduce all expenditure that is not required …,' the Minister said in a recent debate on the Appropriation Bill in the National Assembly. Mboweni will table a supplementary budget on 24 June that will take account of the devastation inflicted on the economy by Covid-19 and the substantially lower revenue expected this year. SARS has forecast a revenue loss of R285bn compared with the February budget estimate.