The Parliamentary Budget Office (PBO) estimates that 2019’s revenue shortfall will amount to R48,9 billion – the worst in the past five years. They estimate that the trend will continue in the next financial year, thanks to the high unemployment rate and slow growth.
Subdued household consumption and fixed investment are among other contributing factors.
Tax and other revenue proposals will not be presented in the Medium-Term Budget policy statement on Wednesday, but revenue shortfall will loom large as the Finance minister is likely to announce an increasing deficit and debt to GDP ratio.
After all, tax revenue outcomes for the past five years have under-performed the budget revenue estimates.
The PBO’s estimates are in line with those of economic analysts and other financial institutions.
Finance Minister Tito Mboweni is expected to announce revised growth estimates, which the Reserve Bank had put at 0,6%. But the PBO dismissed some legislators’ assertions that the country is already facing a fiscal cliff.
The government is already applying multiple strategies to turn around a stagnant economy. It intends to cut its expenditure by bringing down the ballooning wage bill by R4.8 billion this current financial year.
It will also do it through early retirements, and slashing expenses for diplomatic missions around the world, among others. Now, the country and ratings agencies’ eyes will be on Mboweni’s Medium-Term policy statement to get a glimpse of how he intends to turn around the dire fiscal fortunes of the country.