The government increasingly finds itself between a rock and a hard place. It can no longer pay lip service to fiscal reform as debt levels rise unsustainably. The government needs an ideological mindset change, but scepticism abounds, particularly against the backdrop of a national election this year where the ANC’s support looks set to drop further. Overall, the tabling of the National Budget is a significant risk event for the ZAR.

The budget deficit as a percentage of GDP for the 2023/24 fiscal year will likely come in at around 6% of GDP compared with the 4.9% of GDP set out in the MTBPS for the year. The budget deficit for the ensuing years will be greater than what the government presented in the MTBPS. The budget balance accounts for the difference between revenue and expenditure. Therefore, it is only half the story. Significant additional borrowing is required.

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