Mboweni says total Budget spending will exceed R2 trillion
The supplementary Budget is aimed at charting a way forward to kickstarting an economy that was already faltering before the COVID-19 pandemic and lockdown brought it to its knees.
CAPE TOWN – Finance Minister Tito Mboweni has delivered his supplementary Budget speech in Parliament on Wednesday afternoon.
The minister said the projected total consolidated Budget spending, including debt service costs, would exceed R2 trillion for the first time ever.
Gross tax revenue collected during the first two months of 2020/21 was R142 billion, compared to the initial forecast for the same period of R177.3 billion.
"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," the minister said.
"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," he said, adding that the proposals were in the Disaster Management Tax Relief Bill and the Disaster Management Tax Relief Administration Bill that he will table on Wednesday.
"Taken together the measures and adjustments we present translate into a consolidated bBudget deficit of R761.7 billion, or 15.7 per cent of GDP in 2020/21. This is compared to the deficit of R370.5 billion, or 6.8 per cent of GDP projected in February. This increase is mainly due to the revised revenue projections and pay‐outs from the Unemployment Insurance Fund. The narrower measure, known as the main bBudget deficit, is projected to be 14.6 per cent of GDP.
"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."
The minister also announced that the Supplementary Budget proposed R21.5 billion for COVID‐19‐related health care spending. It also proposes a further allocation of R12.6 billion to services at the frontline of the response to the pandemic.
"Allocations have been informed by epidemiological modelling, a national health sector COVID‐19 cost model and our experiences over the past 100 days.
"This money partly supports increased screening and testing, allowing us to open up more and more of the economy."
WATCH LIVE: Mboweni delivers supplementary Budget speech
More details to follow.