By Hassan Isilow
JOHANNESBURG (AA) - South Africa’s finance minister on Wednesday said they expect the country’s economy to grow by 1.5 percent in 2018, rising to 2.1 percent in 2020.
“The 2017 Gross Domestic Product (GDP) growth projection has been revised upward to 1 percent, which is higher than the 0.7 percent expected at the time of the Medium Term Budget Policy Statement (MTBPS) last year,” Malusi Gigaba said while presenting the budget in parliament.
Gigaba said despite slow economic growth and a recession in 2017, the economic growth outlook has improved over the past few months.
He attributed the growth to agriculture and improved investor sentiment and business confidence.
Newly elected President Cyril Ramaphosa has promised policy certainty to boost investor confidence and a zero tolerance for corruption.
His predecessor Jacob Zuma was accused of not having policy certainty because he would fire key ministers leading to tumbling of the currency and stock markets.
- Tax hikes
Gigaba also announced one percent increase in value added tax (VAT) from 14 to 15 percent starting April, hoping to generate 22.9 billion rand (approximately $1.9 billion).
This is the first time that VAT has been increased in 25 years.
He also announced 85 billion (approximately $7,307,450,000) cut in government spendings over the next three years in a bid to stabilize government debt.
The minister also announced higher taxes on luxury goods including cell phones, cosmetics, motor vehicles and electronics. Alcoholic beverages and cigarettes also receive a tax increase. High income earners will also be taxed more.