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- At the end of November, South Africa’s main budget balance was in deficit 77% higher than in the same period last year, figures released Wednesday show.
- Financing costs go up, expenses go up, and income goes down.
- SA is projected to run into a deficit of R700 billion for the year, and it is on track.
- For more stories, visit www.BusinessInsider.co.za.
At the end of November, South Africa’s main budget balance had a deficit not far below R440 billion, new figures released on Wednesday show, a 77% increase over the year-to-date deficit at the same time in 2019. .
The monthly release of the national treasury, of actual income, expenses, and loans, serves as a continuous check on annual budget projections.
At the moment, the deficit between income and expenses is expected to reach R707.8 billion by the end of the financial year.
By November 30, the state had spent R1.131 billion, compared with R1.054 billion at the same time last year, an increase of just over 7%, the data release shows.
But after the lockdowns and associated economic devastation, revenue for the year to date had amounted to just R693 billion, more than 14% compared to the roughly R800 billion that had been raised in November 2019.
Meanwhile, voted credits increased by 8% to almost R630 billion.
In June, the government announced that it would cut spending on, among other areas, school infrastructure, roads, business incentives, libraries, prisons, universities, and spies, to pay for expenses to defend against the coronavirus and its consequences.
Still, the budget deficit was expected to grow from 6.8% of GDP to 15.7% of GDP, and 21 cents of each rand paid in taxes was expected to be spent on debt service.
South Africa had started heading into a debt spiral, said Dondo Mogajane, the Treasury’s CEO, in the budget statement at the time.
The government plans to cut spending massively in the next few years and hopes to borrow at lower interest rates to keep the fiscal boat afloat.
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