Parliament – Finance Minister Tito Mboweni on Wednesday signalled in a special budget prompted by the Covid-19 pandemic that he was moving South Africa to zero-based budgeting to contain debt that was spiralling to 81.8 percent of GDP and threatening to implode the country's finances.
It shuffles the allocations made in the main 2020 national budget in February, before the virus reached South Africa, to give a further allocation of R12.6 billion to services at the frontline of South Africa's response to the health crisis. "Taken together, the measures and adjustments we present translate into a consolidated budget deficit of R761.7 billion, or 15.7 per cent of GDP in 2020/21.
Mboweni said it was placing an unconscionable burden on future generations and taking South Africa to the brink of a sovereign debt crisis if left unchecked The director-general of the National Treasury, Dondo Mogajane, stressed at the media briefing that the government's fundamental response to the economic crisis had to be nurturing growth, and avoiding debt exceeding 100 percent of GDP.
Mboweni, who has at times during the past three months openly disagreed with Cabinet decisions affecting the economy, appeared emboldened as he said the National Treasury would use the medium-term budget policy statement in October to "pilot" zero-based budgeting.
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