Some economists expecting Treasury to borrow more to plug gaps between expenditure & revenue collection

JOHANNESBURG - Some economists believe Treasury will resort to more borrowing to plug the gaps between government’s high spending habits and low revenue collection.

The latest forecast comes ahead of Finance Minister Enoch Godongwana's Budget Speech in Parliament on Wednesday.

Godongwana is expected to deliver fiscal proposals to avoid a wider deficit.

During the medium-term budget policy statement (MTBPS) in November, key fiscal metrics showed signs of decline.

This includes a R56 billion deficit in revenue collection and a higher debt to GDP ratio, which is creeping towards the 80% mark.

At the time, some economists warned of fiscal slippage.

Chief economist at Investec, Annabel Bishop, said she doesn’t expect any drastic improvement in the national picture since November.

"I think we’re going to see the same figures when they are presented now in February to what we had in the MTBPS. Often, between government finance announcements, we see quite big revisions – this time around that is very unlikely."

While Treasury also has the option of increasing taxes or reducing expenditure, Bishop said that projected borrowing was expected be higher.

"So, government is planning to borrow more to plug the gap in terms of the mismatch between revenue expenditure and collection."

Godongwana is expected to table the budget at 2pm.