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South Africa reports better fiscal position at mid-term budget

South Africa reported an improved fiscal position at a mid-term budget, flagging smaller deficits in the next three years and debt stabilising at a lower level thanks to higher-than-expected revenues.
Source: Reuters.
Source: Reuters.

But a government plan to take on part of Eskom's R400bn ($22bn) debt is not ready, despite assurances that the mid-term budget would contain more details.

The National Treasury confirmed it would take some of the debt but would not commit to a specific amount or timeframe. It said it could take on between one-third and two-thirds of the debt but that it still needed to consult with debt-holders.

"South Africa is restoring the health of its public finances just as the world economy is taking a dangerous turn for the worse," Finance Minister, Enoch Godongwana said in comments accompanying the mid-term budget.

"South Africa's challenges are significant, but its stable macroeconomic policies and efforts to return the public finances to a sustainable position mean that the country is in a better position to weather the storms that lie ahead."

The Treasury now expects a consolidated budget deficit of 4.9% of gross domestic product (GDP) in the current 2022/23 fiscal year, down from 6.0% forecast in the main February budget.

Next year it predicts a deficit of 4.1% of GDP and the following year 3.9% of GDP, down from 4.8% and 4.2% seen in February.

It sees gross debt stabilising at 71.4% of GDP in 2022/23, whereas in February it saw debt stabilising in 2024/25 at 75.1% of GDP.

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