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South Africa plans tax measures to drive revenue amid rising debt

Published

1 year ago

November 1, 2023

South Africa’s finance minister, during a mid-term budget review on Wednesday, revealed plans to drive revenue inflow through increased taxes next year.

The revelation comes as the National Treasury projects wider budget deficits and higher debt over the next three years.

Compared to the 4.0% deficit observed in February, a consolidated budget deficit of 4.9% of GDP is anticipated in 2023–2024. The Treasury projects a 4.6% and 4.2% GDP deficit in the upcoming years.

It is anticipated that South Africa’s gross debt will increase from 5.24 trillion rand in 2023–2024 to 6.52 trillion rand in 2026–2027. Its gross debt is also predicted to stabilise at 77.7% of GDP in 2025–2026, as opposed to 73.6% of GDP in February of the same year.

A major constraint on South Africa’s economic growth potential in the last decade has been rolling power cuts as utility Eskom struggles with breakdowns at its coal-fired power plants. The country is one of Africa’s most industrialised economies, and the power outages have threatened businesses and the general economy. Growth has also been hampered by Transnet, a state-owned logistics company that is also currently performing poorly.

According to the Treasury, the development has led to a decrease in tax receipts, along with a notable decline in mining revenue as commodity prices decline. The projected revenue collections for the current fiscal year, 2023–2024, were $3.04 billion, or 56.8 billion rand, less than what was estimated in the main budget for February.

The official, however, maintained that reductions in spending, modest tax revenue measures, and government-wide efficiency measures—such as reorganising the government through the merger or closure of public entities—were part of the efforts to stabilize the country’s public finances.

“Given the extent of fiscal consolidation required, the Minister of Finance will propose tax measures to raise additional revenue of 15 billion rand in 2024/25 in the 2024 budget,” the Treasury said.

Finance Minister, Enoch Godongwana stated in his budget speech that “our most effective way of funding government is through an efficient tax administration and by broadening the tax base.” The Treasury did not go into detail about the specific measures.

Related Topics:budget Featured South Africa

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Moroccan annual inflation rises to 0.8% in November

Published

1 day ago

December 21, 2024

Ifeoluwa Dada

Morocco’s statistics office has confirmed that the country’s annual inflation rate, as determined by the consumer price index, increased from 0.7% in October to 0.8% in November.

Monthly, consumer prices decreased by 0.2% from October.

The primary driver of inflation, food costs, grew by 0.8% compared to the previous year, while non-food inflation climbed by 0.7%. Core inflation, which does not include more erratic items like food, increased 2.6% annually and 0.2% monthly.

According to the central bank, inflation is expected to average 1% this year, down from 6.1% last year.

Despite the Al-Haouz earthquake, a spike in inflation, and worldwide economic challenges, Morocco’s GDP grew by 3.4% in 2023.

A recovery in tourism, robust industrial exports, and rising private consumption—all bolstered by prudent macroeconomic policies—were the main drivers of growth.

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Nigeria’s $42bn foreign reserves enough for 9 months’ imports— Central Bank

Published

2 days ago

December 20, 2024

Ifeoluwa Dada

According to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), the nation’s $42.01 billion in foreign reserves can cover imports of goods and services for almost nine months.

Cardoso promised Nigerians improved economic fortunes in 2025 while addressing the Senate Committee on Banking, Insurance, and Other Financial Institutions yesterday in Abuja at the presentation of the performance index report.

Cardoso stated: “External Reserves rose from $ 38.35 billion it was on September 30, 2024, to $ 42.01 billion as of December 12, 2024”.

He clarified that third-party receipts in Q3 2024 and revenues from taxes connected to crude oil were the main drivers of the rise in foreign reserves during the specified time.

“We saw remarkable improvements in our trade balance and maintained a current account surplus,” he added.

“Our external reserves level can finance over 9.09 months of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks”.

On cash shortage, the CBN boss reiterated the N150 million fine against any branch of banks caught illegally distributing new Naira notes to currency hawkers and unscrupulous elements and said the Nigerian economy will improve in 2025 through policies and measures.

He predicted a stronger economic future: “Despite our economy’s challenges, there are clear reasons for optimism.

“The gradual stabilization of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”