South African government highlights public spending cuts amid economic hardships

Source: Xinhua| 2020-02-27 11:00:22|Editor: yhy
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CAPE TOWN, Feb. 26 (Xinhua) -- South African Finance Minister Tito Mboweni on Wednesday delivered the 2020 budget speech in Parliament, highlighting public spending cuts, personal income tax relief amid economic hardships such as a record-high unemployment rate, slow growth and increased budget deficit.

In his speech, Mboweni stressed the need to reduce the public sector wage bill by 160.2 billion rand (about 10.5 billion U.S. dollars) over the next three years.

Even with the proposed cuts, the public sector wage bill will still amount to 32 percent of the government expenditure.

"Government recognizes that public service employees should be fairly remunerated, but is obligated to balance compensation demands with the broader needs of society as reflected in the budget," said Mboweni.

The minister also introduced additional government work cost cuts in such areas as the cell phone use and air travels.

Meanwhile, he announced adjustments in personal income tax brackets, saying that as a result, most wage earners will pay 3 percent less on average in income tax a year.

The value added tax will remain unchanged at 15 percent, he added.

The government budget deficit currently stands at 6.8 percent of gross domestic product (GDP).

On South Africa's economic outlook, Mboweni forecast a 0.9 percent growth and 4.5 percent inflation for 2020.

He expressed confidence that economy will get impetus in the next 18 months with benefits from the reform efforts and interest rate cuts earlier, recent gains in platinum group metals prices, as well as electricity regulation to be improved, among others.