“THE budget of the Minister of Finance, Tito Mboweni shows very clearly that the country is in even a greater fiscal and economic crisis than the previous year,” says Fanie Brink, an independent agricultural economist.
He says the cosmetic changes to the new budget of a few billion rand are in fact negligible compared to the government’s total debt burden, which will increase from R3,2 trillion in the current financial year to R4,4 trillion over the next three years! This means that the government’s debt as a percentage of Gross Domestic Product (GDP) will increase from 62% to 72% which is totally disproportionate and immensely worrying.
The budget deficit is increasing every year and may even rise beyond the new high of 6,8% for the 2020/21 financial year since the economy could very easily fall into a long-term recession if the economy enters a permanent negative growth phase. As a result, the South African Revenue Service will find it increasingly difficult to achieve its revenue targets.
In addition, the National Treasury estimates that the economy grew by just 0,3% last year and will grow by just 0,9% this year, while it is well known that the National Treasury’s growth projections are usually too high.
“With these already very low growth expectations and the fact that the ANC government has never really understood how economic growth is created, the chances that the economy will grow again are very slim,” according to Brink.
