By Dave Mohr (Chief Investment Strategist) & Izak Odendaal (Investment Strategist) from Old Mutual Wealth.
The Springboks’ incredible World Cup triumph was a welcome distraction from a week dominated by the gloomy Medium Term Budget Policy Statement (MTBPS). A huge tax revenue shortfall, combined with support for Eskom, means that the government’s budget deficit will be larger than expected, averaging 6% of national income over the next three years. The deficit – the gap between government spending and revenue – has to be plugged largely by borrowing. As a result, government’s debt level will rise faster than economic growth for the foreseeable future, unless something is done to address the situation. (more…)
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