South Africa’s finance minister warned his compatriots to expect big tax hikes in next year’s Budget.
Delivering his mid-term budget in parliament, he says South Africa’s economy at a turning point. It reflects the slide on the global environment but also strikes , domestic energy shortages and administrative shortcoming.
South Africa’s economic performance looking like it did during the days of international pressure against the apartheid regime.
Finance Minister Nhlanhla Nene halved the forecast growth rate down to 1.4% for 2014. That’s a third of what the World Bank’s expecting for the rest of Africa.
South Africa’s five percent annual growth rate fell off after the 2009 global recession.
It’s struggled to reach 2% since then.
Nene’s warned public service workers that government simply cannot pay them increases exceeding the inflation rate of 6.3%.
He forecasts growth will increase to 3% by 2015 as new energy comes on stream.
But this is still short of the rate required to impact on the country’s 25 percent unemployment.
Nene says he’ll rein in spending and increase taxes to cut the current budget deficit from 4% to two-and-a-half percent by 2015.
He’s adamant that the spending cuts won’t compromise social services and financial support for the poor in one of the most unequal societies on the planet.