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Tito Mboweni on SA economy: There are reasons to be hopeful

Delivering his 2021 Budget Speech, Finance Minister Tito Mboweni said the country was not without hope and one of the reasons was a much-improved economic outlook.

Finance Minister Tito Mboweni delivers his Budget speech in Parliament on 24 February 2021. Picture: GCIS.

CAPE TOWN - The country’s economic outlook is still not in good shape, but the Finance Minister maintains things aren’t as bad as they were, and there’s cause for hope.

Tito Mboweni delivered his Budget Speech in Parliament on Wednesday amid government revenue that’s shrunk – but not as badly as predicted in October.

FULL SPEECH: Tito Mboweni’s 2021 Budget

Mboweni said the main budget revenue is projected to be R1.35 trillion, or 25.3% as a share of GDP in 2021/22.

He said the country was not without hope and one of the reasons was a much-improved economic outlook.

“My second reason for hope stems from a much-improved economic outlook. Global economic growth is expected to rebound to 5.5%in 2021 before moderating slightly to 4.2% in 2022, buoyed by the expected rollout of COVID-19 vaccines and other additional policy initiatives.

The South African economy is also expected to rebound by 3.3% this year though it bears mentioning that rebound does come off a very low base.

ALSO READ: Mboweni unveils R2 trillion Budget, focus on vaccine rollout, efficient spending

Mboweni said he was also hopeful because the country was making meaningful progress in the implementation of structural economic reforms promised by President Cyril Ramaphosa.

“I am also hopeful because we are making meaningful progress in the implementation of our structural reform programme. Our structural weaknesses limit the rate at which our economy can grow.”

There’s further good news in revenue collection figures.

In October Treasury estimated the revenue shortfall would run to R312 billion, but in the event that shortfall is almost R100 billion smaller.

Still, the budget review warns that personal income tax collection has been affected by rising job losses and lower earnings for those who are employed.

And corporate income tax collections have been contracting since 2018/19 and will continue to fall this year.

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