REEZWANA SUMAD: Godongwana faces uphill battle in mini-budget
Tough decisions on cards for finance minister as government finances and budget deficit worsen
Faced with lower-than-expected revenue growth, pressure to cut spending and a worsening fiscal deficit, finance minister Enoch Godongwana has his work cut out when he presents the medium term budget policy statement (MTBPS) on November 1. After three years of excessive revenue collection, boosted by higher corporate income tax on the back of a commodity boom, the government faces fiscal turbulence owing to a wider budget deficit and higher debt ratios.
The policy statement is expected to show a revenue shortfall of R31bn in 2023/24 and an expenditure overshoot of R56bn. With a baseline budget deficit of R363bn, the government will need to tap into all its funding sources to finance the larger deficit. But the spiral of the debt-to-GDP ratio, which rises to 78% by 2026/27, is clearly unsustainable...
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