JOHANNESBURG, Feb. 19 (Xinhua) -- South Africa continues to face constrained fiscal space in 2024/2025 due to weak revenues and increasing debt servicing costs, said PricewaterhouseCoopers (PwC) on Monday.
The PwC, a multinational accounting and auditing firm headquartered in London, released its second South Africa economic outlook report for 2024 on Monday. It said increasing debt, tight financial conditions and weak economic growth are putting pressure on fiscal sustainability while increasing vulnerability to external financial shocks.
"South Africa's fiscal space will be constrained in 2024/2025 due to weak revenues and rising debt-servicing costs. High and growing debt-service burdens are limiting the ability to invest toward the Sustainable Development Goals. For South Africa, this increases obstacles to tackling the country's triple challenges of unemployment, poverty, and inequality," said Lullu Krugel, PwC South Africa chief economist.
Krugel said they expect the 2023/2024 fiscal year to have a budget deficit equal to 5.1 percent of the gross domestic product (GDP). A budget deficit of over 3 percent of GDP over a long period, as South Africa is experiencing, accelerates debt servicing costs, eating into the fiscal spending envelope, said Krugel.
Last year, South African Finance Minister Enoch Godongwana said the South African Revenue Service would focus on enforcing compliance in debt collection, fraud prevention, curbing illicit trade, voluntary disclosures, and encouraging honest taxpayers to comply voluntarily. South Africa's tax gap is estimated at 15.8 billion U.S. dollars.
Godongwana said he would announce some tax increases while presenting the budget in parliament on Wednesday. ■
