[imagesource: Esa Alexander]
Sorry, I know today’s been one of those days where we’ve shared a fair amount of bad news.
Five years of load shedding and the cost of life after death, for example.
If you’re not up for more bad news, I suggest you beat a hasty retreat at this stage, because what comes next will not be pretty.
Right, let’s hear from the National Treasury, which yesterday released the technical guidelines that must be followed by government departments and public institutions ahead of announcing their medium-term budget estimates for the 2021 budget.
Those guidelines pointed out that ever since the 2008/2009 financial year, government spending has far outweighed tax revenues, which has led to a huge growth in borrowing in order to fund that gap.
As Moneyweb reports, the Treasury warned “that a default or fiscal crisis could see the South African economy lose an estimated R2 trillion by the end of the decade”:
The state’s net loan debt has increased six times in the past 12 years – from under R500 billion in the 2007/2008 fiscal year, to close to R3 trillion by the end of 2019/20, said Treasury.
The impact of the Covid-19 pandemic has caused a sharp deterioration in South Africa’s already-fragile public finances. The budget deficit for 2020 has more than doubled since the February budget to 15.7% of GDP (gross domestic product), while the economy is expected to contract by 7.2%.
South Africa is expected to miss the latest tax revenue target by more than R300 billion, which makes the decision to ban the sale of tobacco products, as well as alcohol, all the more laughable.
You don’t need to be a financial wizard to know that reports of the gross national debt exceeding the country’s GDP by 2023 paint a grim picture.
Treasury did stress that South Africa’s economy is resilient, with steps to rebuild and stabilise – more details on that here.
Sheesh, depressing stuff really.
Let’s finish on a high note – enjoy your 290th day of being rugby world champions, with another 1 159 days ahead.
[source:moneyweb]
