HOW WILL SA’S NEW FINANCE MINISTER TACKLE STATE SPENDING?

ahuge tax revenue windfall generated by high global prices for the minerals which South Africa exports has created a buffer shielding the country’s finances from this year’s costly shocks of civil unrest, a severe third wave of Covid-19, and continued loadshedding.

Economists now expect total tax revenues – buoyed mainly by the profits of mining companies – to overshoot National Treasury’s forecasts by R100bn in the 2020/2021 financial year, enabling the budget deficit to shrink even after the additional spending.

However, the unexpected expenditure will absorb money which could have been used to reduce SA’s heavy debt burden and bring down the cost of borrowing, which has been the fastest-growing category in the budget for the last few years.

The revenue windfall will finance most of a R38.9bn package of measures announced in July to support households and businesses affected by the Covid-19