SA’s budget deficit hits record 15.7% of GDP

Compared to February budget forecast of 6.8%
Image: Waldo Swiegers, Bloomberg

South Africa’s budget deficit is forecast to more than double to 15.7% of GDP in the 2020/21 financial year, Finance Minister Tito Mboweni revealed in his adjusted or supplementary budget on Wednesday, which comes in response to the Covid-19 economic fallout.

“Covid-19 has turned the global economy upside down… The South African economy is now expected to contract by 7.2 per cent in 2020. This is the largest contraction in nearly 90 years,” he said.

Mboweni noted that the country’s consolidated budget deficit is now forecast to come in at R761.7 billion, equating to 15.7% of GDP in 2020/21.

“This is compared to the deficit of R370.5 billion, or 6.8% of GDP projected in the February budget. This increase is mainly due to the revised revenue projections and pay-outs from the Unemployment Insurance Fund. The narrower measure, known as the main budget deficit, is projected to be 14.6 per cent of GDP,” he added.

Mboweni said that the government’s projected total consolidated budget spending, including debt service costs, would exceed R2 trillion for the first time ever. However, he noted that gross tax revenue collection was significantly down due to the impact of Covid-19 and restrictions both locally and globally.

He said tax revenue collection during the first two months of 2020/21 was R142 billion, compared to National Treasury’s initial forecast for the same period of R177.3 billion.

“Put another way – we are already R35.3 billion behind on our 2020/21 target… As a consequence, gross tax revenue for the 2020/21 fiscal year is revised down from R1.43 trillion to R1.12 trillion. That means that we expect to miss our tax target for this year by over R300 billion,” he added.

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Now they gonna blame everything on covid19

@black Tin : are you forgetting Apartheid ???
It was a total Non Budget actually saying absolutely nothing other than that we need to borrow overseas and effectively get into more trouble .

The government can’t run a bath let alone a country’s finances.

Heavily bloated public sector wage bill, junk SOEs, zero accountability, “missing” billions, unnecessarily cutting off tax generating products, massive red tape & ZERO solutions on the way forward… just hot air

If only ANC supporters had a sense of what their esteemed leaders are doing to this country. It is truly frightening. Wealth creation for the general population is all but a fantasy these days. Then again how can they develop a plan when they don’t even think there is a Government p[ending problem.

Tito old chap, we knew all that.

question is what are you going to do about it? Public service bill?? Fire half of them no onw will notice.

Eskom? Fire half of them no one will notice.

SA the 50% country.

The sad part about all of this is that had there been no Zuptas, all of this would have been avoided.
And I bet my last dime we’ll never ever recover the stolen billions!
You should be proud of your ‘collective responsibility’ comrades.

There is much more to read between the lines. What he did not say, tells us much more than the few words of obfuscation that he left us with. What would Margaret Thatcher have said if she found herself in this position? Firstly, she would point to the fact that we only have pension funds between ourselves and sovereign default. The pension savings are the shock-absorbers of a sovereign default. Now that everyone is awake and paying attention, she will go on to offer the only solution to save pensioners from financial ruin.

Privatise all SOEs and municipal services. Privatise prison and police services. Scrap BEE codes. Burn the Mining Charter. Stop redistributive municipal rates and taxes. Break the back of the unions. Remove the minimum wage and allow the market so set the wage with supply and demand factors. Scrap security of tenure laws. Return mineral rights to the rightful owners. Appoint individuals on merit only, and remove affirmative action quota requirements. Get people who steal from the state before a firing squad because they steal from the poorest of the poor.

Give title deeds to everyone who lives on communal land. Break the power of traditional leaders and get them under the law of the land. The right to vote is tied to the amount of taxes one pays. Those who contribute to society should be able to determine the future. Those who live off grants should not be able to use the legislature to plunder those who contribute to society.

As we can see, Tito Mboweni did not say what Margaret Thatcher would have said. So, sovereign default and hyperinflation are inevitable, after the pension savings have been plundered. The savings won’t necessarily be plundered outright, through prescribed assets, as most expect it would. It will be plundered in a way that not one man in a million will be able to see, through financial repression. Financial repression is a stealth tax on pension savings. It is politically acceptable because no voter understands it. So, financial repression it will be.

What a genius ! We going to use the Master Card to settle the Visa Card …… Why didn’t I think of that ?
Sigh …………

End of comments.

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