- Finance Minister Tito Mboweni has delivered his supplementary Budget Speech
- The projected total consolidated budget spending, including debt costs, will exceed R2 trillion for the first time ever
- The amount of tax revenue collected during the first two months of this financial year feel over R30 million short of what was originally predicted
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Finance Minister Tito Mboweni has addressed South Africa on the sticky business that is his supplementary Budget Speech on Wednesday.
The minister revealed that the projected total consolidated budget spending, including the cost of servicing the nation's debt, will exceed R2 trillion for the first time ever.
Mboweni also revealed that the R177.3 billion expected tax revenue collected during the first two months of this financial year had only seen R142 billion collected in total.
The minister explained that this meant SA is currently over R30 billion behind on its target:
"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."
READ ALSO: South Africa's unemployment rate increases to worst level in 10 years
Mboweni explained that this was partially due to the tax relief measure put in place amid the Covid-19 pandemic:
"Part of this revision is because the measures announced earlier this year give taxpayers outright relief of R26 billion and delays in tax collection of approximately R44 billion."
Turning his attention to the nation's debt, Mboweni explained that borrowing is set to become a major issue:
"Our early projection is that gross national debt will be close to R4 trillion, or 81.8 per cent of GDP by the end of this fiscal year. This is compared to an estimate of R3.56 trillion or 65.6 per cent of GDP projected in February. Without external support, these borrowings will almost entirely consume all of our annual domestic saving, leaving no scope for investment or borrowing by anyone else. For this reason, we need to access new sources of funding. Government intends to borrow about US$7 billion from international finance institutions to support the pandemic response. We must make no mistake, these are still borrowings. They are not a source of revenue. They must be paid back."
Briefly.co.za reported that a spike in the unemployment rate had further added to the grim economic state of the nation.
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