President Cyril Ramaphosa could not break his grim gaze at the podium, as Finance Minister Tito Mboweni confirmed yet another blow in his tenure as South Africa’s head of state.
South Africa records largest tax shortfall in history
In his 2021 budget speech, the minister revealed that in the 2020/2021 fiscal period, South Africa recorded a tax shortfall of R213 billion, the worst performance in history.
“I must advise this house that we now expect to collect R1.21 trillion in taxes during 2020/2021 which is about R213 billion less than our 2020 budget expectations. This is the largest tax shortfall on record,” Mboweni revealed.
The only way to forge ahead, Mboweni said, was to “shore up our fiscal position in order to pay back the massive obligations we have incurred over the years.”
If Treasury’s math predictions are accurate, then in 2021/2022, SARS should add to this tally and collect R1.37 trillion in taxes, a 13.2% increase from our current reality.
Deep in the dumps: South Africa’s gaping debt hole
This minute change, however, is far removed from the solution to our economic troubles. In fact, the minister conceded that the government is in too deep of a hole with its debt obligations. “We owe a lot many people a lot of money,” he said.
“This includes foreign investors in our bond market, pension funds, local and foreign banks, unit trusts, financial corporations, insurance companies, the PIC and ordinary South African bondholders,” Mboweni added.
Mboweni also indicated that for the next few years, South Africa would have no other choice but to extend its borrowing capacity and dig itself deeper into a debt crisis.
“Our public finances are dangerously overstretched. Our borrowing requirement will remain well above R500 billion in each year of the medium-term, despite the modest improvement in our fiscal position,” he said.
To add salt to that, Mboweni confirmed that South Africa’s debt will rise by 31.6% in the next three fiscal years.
“Consequently, gross loan debt will increase from R3.95 trillion in the current fiscal year, to R5.2 trillion in 2023/24,” he said.
The question of where the money to fill this gaping debt hole was still being answered by the minister at the time this article was published.
