Category Economy
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Budget Speech 2021: Key economic takeaways

25 February 2021 FNB
Mamello Matikinca-Ngwenya, FNB Chief Economist

Mamello Matikinca-Ngwenya, FNB Chief Economist

Key economic takeaways:

Treasury projects a significant main budget revenue overshoot of R102.8 billion in the current fiscal year (2020/21) from the Medium Term Budget Policy Statement (MTBPS) total main revenue projection of R1.09 trillion. This implies that the government's main budget revenue will decline by a less severe 10.8% instead of the 18.4% envisaged at the MTBPS. Still, relative to the 2020 Budget, the main budget revenue is underperforming by R197.2 billion, reflecting the profound impact of Covid-19 on economic growth and revenue base. At 6.8% in 2020/21, the main budget expenditure growth estimate is in line with MTBPS projection, but R38.2 billion higher than the 2020 Budget estimate. This, together with the projected revenue overshoot, effectively reduces the main budget deficit to R603.4 billion (or 12.3% of GDP) relative to the R707.8 billion (14.6% of GDP) previously forecast at the MTBPS.

For the current fiscal year, gross debt is revised slightly lower at 80.3% of GDP, previously 81.8%. It is now peaking at 88.9% of GDP in 2025/26 (previously: 95.3% of GDP in 2025/26 at the MTBPS) - government’s strategy will be to reduce the borrowing requirement and debt issuance using the higher cash balances over the medium term. Government's debt-service cost will grow by 13.3% per annum over the medium term, reaching R338.6 billion (5.6% of GDP) by 2023/24.

Quick Polls


Covid-19 may accelerate certain industry trends. What are we likely to see?


Adoption of contactless technologies and digital experiences will likely be accelerating emerging technologies further
The consumer will expect safety and precautionary measures, driving the need for enhanced surveillance policies and technologies, which may pose potential privacy concerns
Rising activism among consumers and employees could drive an increased focus on corporate purpose
Value chain disruption is likely to lead to an increase in creative partnerships, which may in turn cause organisations to further invest in developing the mindset and agility to collaborate across sectors in the ecosystem
Cost management will be a critical priority to ensure business continuity based on cash flow requirements, to manage lower margins and revenues during a downturn
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