There were no surprises in Minister Mboweni’s supplementary budget speech delivered today, 24 June 2020. Tax rates, transfer duty and VAT all remain the same. The government has also budgeted to pay R3 billion to ensure the solvency of the Land Bank.
Original estimates as to how our economy would perform this year have been negatively affected, and the economy is now expected to contract by 7.2%.
In his speech, the Minister highlighted the increasing gap between tax collection and expenses, which has been exacerbated by the COVID-19 pandemic, and has budgeted to borrow an additional $7 billion to balance the accounts.
The Minister was acutely aware of the possibility of a sovereign debt crises, which would occur if the country would be unable to service its debt. To prevent this there are plans to stabilise debt repayment during the 2023/24 budget. Until then our national debt will certainly increase.
We will keep you informed of any other important developments that might come to light in the legislation that follows the speech.
24 June 2020