Money Matters
Issue 37

November 2020

We continue to wonder when and where this will all end. But we must remain resolute, patient and disciplined, whilst we help you navigate through this crisis with peace of mind. This year has flown by and has certainly been full of the unexpected. A stressful time for many, from worrying about personal health and that of loved ones, to anxiety around finances. Self-care at this time is more important than ever, so remember to schedule in time to look after your physical and emotional health, and give us a call if you’d like to talk about your financial health. Summer is just around the corner, and the air is heavy with the scent of spring blossoms – the promise of new growth and fresh starts is sure to lift spirits as we head for the end of this most challenging year.

The death of a spouse is traumatic enough without having to deal with the aftermath of a possible transition into poverty due to poorly managed financial affairs. A recent survey (Mathew Greenwald & Associates) of women whose partners have died, showed that half of them lost 50 percent of their income following their spouses’ death and 48 percent had difficulty in determining what benefits they were entitled to. Even though women are becoming more involved in their family’s financial affairs, and sometimes may even run them, widowhood is still a significant risk factor when it comes to possibly transitioning into poverty. This could even apply to the seemingly affluent.

• National Treasury revised its GDP forecast to -7.8% in 2020, recovering to real GDP growth of 3.3% in 2021. Economic growth is expected to average 2.1% over the three‐year forecast period.
• A combination of expenditure and revenue measures is expected to narrow main budget deficit from 14.6% of GDP in 2020/21 to 7.3% by 2023/24.
• Gross debt is projected to reach 81.8% of GDP in the current year (up from 65.6% projected in February 2020). Gross national debt is projected to stabilise at 95.3% of GDP by 2025/26.
• Debt-service costs are projected to increase from R225.9 billion in 2020/21 to R353.1 billion in 2023/24, at an average annual growth rate of 16.1%. Debt-service costs are now 4.8 % of GDP, up from 3.3% in 2016/17.
• To assist with the consolidation, government has projected tax increases of R5 billion in 2021/22.
• Revenue forecasts for 2020/21 were revised down (tax revenue in the current year is projected to be R8.7 billion lower than the June estimate).
• Funding for the large state-owned enterprises will continue. The Minister announced that South African Airways (SAA) is allocated R10.5 billion in 2020/21 for its business rescue plan, while the Land Bank’s restructuring will require R7 billion over 2021/22 to 2023/24.