The government has been occupied with saving lives amid the Covid-19 pandemic and has also had to deal with saving an already damaged economy. In his supplementary budget, presented virtually to Parliament on Wednesday, Finance Minister Tito Mboweni said the economy has suffered a huge blow and that it will contract by 7.2% in 2020. The treasury’s gross domestic product estimate is a bit higher than the South African Reserve Bank’s forecast of 7%.
Even though the numbers are depressing, Mboweni said this supplementary budget will set a roadmap to stablise debt by improving spending patterns, and creating a foundation for economic revival. Mboweni said he has found a narrow gap that can usher the country out of the looming sovereign debt crisis. The government will work to slim the deficit and stabilise debt at 87.4% of gross domestic product in 2023/2024 by using zero-based budgeting, which will be adopted in the medium-term budget.
“The uptake of the special grants has been slow and [now] we are providing best estimates and that’s why we reduced the allocation”, treasury director general Dondo Mogajane said in a media briefing after Mboweni’s presentation. The Unemployment Insurance Fund has provided R23-billion in Covid‐19 relief to more than 4.7-million workers who have had their incomes reduced because of the pandemic.
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