The National Treasury expects South Africa’s economy to contract by 7.2% this year as households and companies contend with the combined effects of economic restrictions and the continued spread of the virus.
“This is the largest contraction in nearly 90 years. Inflation will likely register 3 per cent in 2020, in line with the outcome of this morning. Commodity price increases and a weaker oil price have softened the blow, but as a small open economy reliant on exports we have been hit hard by both the collapse in global demand and the restrictions to economic activity,” said Finance Minister Tito Mboweni as he tabled the historic supplementary budget.
The budget also laid bare the fiscal pressures facing the state with the government now expecting to collect R300 billion less taxes than it had initially planned.
“Gross tax revenue collected during the first two months of 2020/21 was R142 billion, compared to our initial forecast for the same period of R177.3 billion. Put another way – we are already R35.3 billion behind on our 2020/21 target. As a consequence, gross tax revenue for the 2020/21 fiscal year is revised down from R1.43 trillion to R1.12 trillion. That means that we expect to miss our tax target for this year by over R300 billion,” Mboweni added.