South Africa’s Supplementary Budget Review – sobering insights

South Africa’s Supplementary Budget Review – sobering insights

Key takeouts

  • Tax revenue forecasted to be R304 billion less than expected in February Budget
  • Government will have to borrow more as the forecasted debt/GDP ratio is now 81%, compared to 63% in February this year
  • Projected budget deficit/GDP in February was 6.8%, compared to a projected deficit of 14.6% in today’s Supplementary Budget
  • Debt servicing cost has become one of Government’s largest budget allocations, coming in at around 21% of total expenditure
  • In addressing Government debt, two scenarios were highlighted:
    • A passive scenario which could see the debt/GDP ratio go to 120% in five years’ time, potentially resulting in a default
    • An active scenario which will require structural reform, zero-based budgeting and political will

 

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