Fiscal consolidation is no longer on the cards. Government expenditure has exceeded revenue by about R200-billion this year, raising jitters that Treasury will have to borrow more to avoid a debt blowout.
When Finance Minister Enoch Godongwana delivered his Budget Speech in February, the rand and domestic bonds initially rallied after market jitters over South Africa's debt trajectory spinning out of control were briefly allayed.
Don't bet on a similar rally when Godongwana unveils the Medium-Term Budget Policy Statement (MTBPS) - an outline of fiscal plans and forecasts for the next three years - on Wednesday, 1 November.
Hope of "fiscal consolidation" has evaporated, with revenue flows reduced to trickles as the commodity windfall withers and the wider economy barely grows in the face of the unfolding calamity of state failure.
Fiscal consolidation is no longer on the cards. Government expenditure has exceeded revenue by about R200-billion this year, raising jitters that Treasury will have to borrow more to avoid a debt blowout.
Shortfall expected
It's instructive to look at last year's MTBPS and February's Budget 2022/23 to see just how far things have gone off the tracks.
In the 2022 MTBPS, gross debt was seen stabilising at 71.4% of GDP in 2022/23. The budget deficit was seen narrowing from 4.9% of GDP in 2022/23 to 3.2% in 2025/26. In 2023/24, a primary budget surplus of 0.7% of GDP was expected, which...
