Economist Mike Schussler tells OFM News all eyes are on the Finance Minister, Tito Mboweni, as he tables the Medium-term Budget on Wednesday afternoon, to hear what the government plans on doing to decrease this deficit. 

In June, during his Supplementary Budget Speech, Mboweni revealed that the gap between the government’s income and expenditure had been forecast to more than double in 2020/21, reaching 15,7% of the Gross Domestic Product (GDP). Schussler says we are aware the deficit is coming down but asks if this is happening quickly enough.

“How and where do we lend all this money from, is the third aspect that I think is going to be important for people from the perspective of the investment. From a government perspective, it becomes a matter of where is the spending going to be cut,” says Schussler.

The state’s soaring wage bill has been identified as a thorn in the government’s side, and expectations are that Mboweni will announce cuts in that regard.

The Covid-19 pandemic has been blamed for the sharp increase in the budget deficit. The country has incurred a R300 billion shortfall, following the introduction of R500 billion's worth of interventions meant to revive the country’s stalled economy in April.

South Africa shed 2,2 million jobs during the second quarter amidst the pandemic.

OFM News