Madam Speaker, We are in the midst of a fast‐evolving pandemic. In South Africa and around the world, we have made the decision to protect each other. We have quickly adapted.
Second, Mr President, it lays a path for the direction you gave us on 21 April to: “not merely return our economy to where it was before the coronavirus, but to forge a new economy in anew global reality” So today, with an eye on the future, we set out a strategy to build a bridge to recovery. Our Herculean task is to close the mouth of the Hippopotamus!Our Herculean task is to stabilise debt.Let me begin by outlining our updated fiscal and economic forecasts for the current fiscal year. Covid‐19 has turned the global economy upside down. In the February Budget, we expected that the global economy would expand by 3.3% in 2020. We now expect a global contraction of 5.2% this year.
Put another way – we are already R35.3bn behind on our 2020/21 target. As a consequence, gross tax revenue for the 2020/21 fiscal year is revised down from R1.43-trillion to R1.12 trillion.That means that we expect to miss our tax target for this year by over R300bn. Without external support, these borrowings will almost entirely consume all of our annual domestic saving, leaving no scope for investment or borrowing by anyone else. For this reason, we need to access new sources of funding.Government intends to borrow about $7bn from international finance institutions to support the pandemic response. We must make no mistake, these are still borrowings. They are not a source of revenue. They must be paid back.The Supplementary Budget proposes R21.
We thank all those who have made much needed contributions to the Fund. These examples show that working together with the private sector with a common purpose we can getstuff done.We will use these lessons to re‐energise public‐private partnerships.Madam Speaker, over 18-million South Africans have received a temporary Covid‐19 grant. The roll out of the short‐term Special Relief of Distress grant will temporarily support those without an income. An additional 1.
Municipalities will adjust their budgets to take into account the sharp decline in revenue as a result of the pandemic. We urge communities to hold councils accountable for the spending of Covid‐19 funds.National Treasury will also monitor the spending through monthly and quarterly reports.Madam Speaker, after a slow start, including all the detailed and technical legal preparations, the loan guarantee scheme is expanding rapidly. In its first month, the scheme lent over R10bn.
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