With South Africa staring down a fiscal cliff, Finance Minister Tito Mboweni managed to keep the country’s 2020 financial year consolidated budget deficit forecast at 15.7% of GDP, according to his 2020 Medium-Term Budget Policy Statement (MTBPS) released on Wednesday in Cape Town.
Economists and market watchers were worried that the budget deficit of Africa’s most advanced economy would widen even further, after Mboweni revealed during his emergency Covid-19 budget in June that the budget deficit forecast would more than double this year.
During his main budget speech in February, he forecast the budget deficit would increase to 6.8% of GDP in 2020, compared with the 6.4% outcome of last year. But, in June, National Treasury was forced to revise the number to 15.7% of GDP during the June supplementary budget.
According to the MTBPS, the consolidated deficit is expected to narrow from 15.7% of GDP in 2020/21 (R761.1 billion) to 7.3% by 2023/24 (R433.4 billion). Gross national debt is projected to stabilise at 95.3% of GDP by 2025/26.