By Vuyani Ndaba

JOHANNESBURG – South Africa’s Treasury will halve its consolidated debt after a healthy collection of corporate taxes that was boosted earlier in the year by higher commodity prices, according to Reuters Poll on Tuesday.

A Nov. 4–8 poll showed that the deficit in the budget was likely to shrink to 6.8% of the gross domestic product next year, 6.3% next year, and 5.6% in 2023/24.

The Treasury reported in February that its 2020/21 budget deficit for consolidated government was at 14.0%, as opposed to 15.7% predicted last October.

The huge expenditures made last year to fight the COVID-19 epidemic caused budget deficits to widen around the globe.

This year, the Budget Policy Statement will be managed by Enoch Godongwana (Finance Minister). Annabel Bishop from Investec said that he will likely stick to his fiscal-consolidation goals and growth-stimulatory aims. However, he should avoid accelerating current expenses.

Also, the poll showed that the median gross-debt-to-GDP ratio was 71.0% in this year, 72.0% in next year, and 76.5% the year after. This is lower than the February poll, which predicted public debt to reach 92.7% by 2023/24.

Jeffrey Schultz is an economist with BNP Paribas. (OTC:) He noted that record-breaking terms of trade in the country have resulted a strong mining sector profit and increased tax revenue. This has added to the overall revenue base.

Still, Barclays (LON.) Michael Kafe said there was a growing risk that the South African government’s temporary gains over the last two years could be used to encourage permanent fiscal transfers. These may prove difficult to maintain once the commodity price declines or normalize.

Kafe added that this includes continuing discussions on the introduction of “family grants” which could run 1-1.5% annually.

He suggested that replacing the temporary coronavirus grant-related to the grant with a permanent grant, a risk which was well-known by the prior finance minister, would have important implications for debt trajectory.

It has been speculated that there could be an announcement on the Nov. 11 medium-term Budget of basic income or family grants. This would make forecasting the budget for the longer term, according to economists.

Another Reuters poll revealed that 2022 growth will slow to a median 2.2%, compared to 5.0% in the previous year. It comes after a strong first half of commodity prices.

(Reporting, polling by Vuyani Nadaba Editing Jonathan Cable and Mark Heinrich