The State of South Africa’s Public Finances before the 2016 Budget Speech

SOUTH AFRICA - Report 27 Jan 2016 by Iraj Abedian

Heading towards the 2016 budget speech to be delivered on February 24, the state of South Africa’s national government finances has come under scrutiny because of the myriad of challenges that are currently faced by the country including, but definitely not limited to, low economic growth. On January 19, the IMF released an update of its World Economic Outlook and it revealed that the organization had downgraded the country’s projected growth to 1.3% for 2015, and a dismal 0.7% for 2016. Among other things, this means that the base for revenue collection is shrinking. To illustrate this, Graph 1 shows the major sources of government tax revenue and their correlation with economic growth.

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