WATCH: R209bn budget shortfall - what does it mean?

2017-10-27 06:30

Cape Town - Minister of Finance Malusi Gigaba confirmed that South Africa was facing a severe revenue shortfall when he delivered his maiden mini budget speech on Wednesday.

"Due to lower than expected economic growth this year, gross tax revenue for 2017/18 is projected to be R50.8bn lower than projected in the budget," said Gigaba.

The finance minister said the budget deficit would widen to 4.3% of GDP in 2017/18, far higher than its target of 3.1%.

"Gross national debt is projected to reach 61% of GDP by 2022, with debt-service costs approaching 15% of main budget revenue by 2020/21," said Gigaba.

The state's total revenue shortfall, over three years, may reach R209bn.

In the wake of the budget, Fin24 presenter Moeshfieka Botha spoke to Raenette Taljaard, the Executive Director of a non-profit organisation Economic Research Southern, about the implications of the revenue shortfall.

She noted that the figure of R209bn presupposes the country's growth rate would pick up.

"It’s not even a revenue shortfall over the MTF [medium-term framework] period on continued sluggish growth, it’s with growth picking up somewhat," said Taljaard.

"So, I think there is a concerning development in terms of the revenue figures that we’ve seen."

* Visit our Mini Budget Special Issue for all the news, views and analysis.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter: