Loaded for Bear: Budget 3.0 faces an ‘event horizon’ that could suck SA into a black financial hole

Black holes are mysterious cosmic objects that astronomers, physicists and philosophers here on Earth have long grappled to understand.

Massive concentrations of matter, black holes are so dense that their gravitational pull beyond what is termed the “event horizon” is so strong that not even light can escape.

The bottom line is that once you cross the “event horizon”, there is no going back. You get sucked into the black hole – a place from which there is no return.

The South African government’s third attempt at a Budget this year is hovering precariously close to an economic event horizon.

With the wildly unpopular and ill-conceived VAT hikes now launched into the outer reaches of space, Finance Minister Enoch Godongwana must find a way to craft a Budget that does not suck the South African economy into a fiscal black hole.

The revenue shortfall over the medium term is estimated at R75-billion but that could balloon as South African economic growth seems sure to grow at a slower-than-expected pace as Donald Trump’s trade wars take their toll on the global economy.

Meanwhile, South Africa’s debt-to-GDP ratio is nearing the 75% mark, severely curtailing the usual option of borrowing to make up the shortfall.

In short, an event horizon looms and the laws of economic gravity will not be defied. Staring into the abyss of a black hole will require Treasury to make significant expenditure cuts if it does not want to be pulled into the void.

Another prism through which to regard this matter is to imagine someone kayaking on a river towards a waterfall.

This was the analogy used last week by physicist Dr Luca Pontiggia for his acclaimed and visually electrifying show at the Joburg Theatre, Hidden Giants: Where Black Holes Meet Human Curiosity.

As the kayaker or canoeist approaches the waterfall, the speed of the water flow will soon equal the force applied by the paddle to reverse. Eventually there is a point of no return, and the vessel gets sucked through the spray and plunges down the waterfall.

This watery event horizon or point of no return is perhaps a better take on Treasury’s dilemma than a black hole as it conjures up an image often used by economists and analysts – the fiscal cliff.

With a black hole, once the event horizon is passed, there is no going back from the inside of a dark void that is invisible.

“Abandon all hope, ye who enter here,” is the fate that awaits all matter pulled into a black hole.

Finance Minister Enoch Godongwana at a meeting of G20 finance ministers and central bankers in Cape Town on 27 February 2025. (Photo: Dwayne Senior / Bloomberg via Getty Images)