South Africans are urged to take stock of their personal finances and better manage personal expenses following the downgrading of SA’s credit rating by Moody from “stable” to “negative” on Friday 1 November.
South Africans must improve personal expenditure to stimulate the wheels of the economy, says Jithendra Maharaj, finance and economics lecturer at private higher education institution MANCOSA.
“South Africans will have to undertake personal self-analysis, priotising personal budgeting, improved timeous payments for public utilities and, more honest and transparent tax returns.
“Spending should rather be enabled with the intent of curbing unemployment within South Africa,” he said.
The medium-term budget policy statement tabled by Finance Minister, Tito Mboweni, on 30 October places South Africa’s total revenue shortfall at R52.5 billion. Moody’s downgrading of South Africa’s investment-grade credit rating to negative, is in response to poor economic growth, high unemployment and the questions surrounding the development of a viable fiscal strategy by government.
Government debt is growing and the possibility of a fully-funded National Budget looks unlikely. South Africa’s public sector wage bill has been targeted as a possible solution to curbing government expenditure with efforts made by the Finance Minister to stop further increases in salaries for senior government officials and to decrease fringe benefit allowances.
On the impact the downgrade will have, Maharaj said South Africa would be less likely to be seen as a preferred choice for much needed foreign investment to alleviate the increasing unemployment rate, stimulate GDP and add value through further revenue for the nation, creating a larger tax-base.
“South Africans must be more vociferous and take a far greater stance towards fiscal and monetary mismanagement by government. This is achievable by becoming an active member in the economic decision-making process and understanding that South Africans do indeed possess the ability to influence government policies and strategies through the process of democracy,” he concluded.