Finance minister Tito Mboweni tabled the adjusted national budget today, June 24th. The adjustments come as a result of the COVID-19 pandemic that wreaked havoc on the country’s economy. Many businesses have closed their doors permanently, and as a result, tax income is impacted – the response to the Coronavirus pandemic has had countless financial ramifications for South Africa.
The minister’s adjustment budget was projected to see R130 billion from the R500 billion Coronavirus stimulus package, redirected. Mboweni stated that he plans to make ‘serious and unusual changes’ to expenditure. Tech Central cites Paul Vecchiatto with: “The fiscal deficit is likely to be double the 6.8% of GDP he projected in February, and forecasts for government debt could be close to 80% of GDP.” Minister Mboweni also adds “We can no longer spend the way we were spending before. A sovereign-debt crisis is a very serious matter and we are looking at in the eye by 2024 if we do not redo our budget if we do not manage our house finances carefully.”
In the speech, Minister Tito Mboweni states that this is the largest contraction that the country has seen in nearly 90 years and that inflation will likely register 3% in 2020.
“Commodity price increases and a weaker oil price have softened the blow, but as a small open economy reliant on exports we have been hit hard by both the collapse in global demand and the restrictions to economic activity,” Mboweni said further.
Watch the full speech below: