Seven key points from Tito Mboweni's 'emergency' Covid-19 budget
Finance minister Tito Mboweni laid out the full extent of the damage wrought by the Covid-19 crisis on the state’s already weak finances in his supplementary budget speech on Wednesday.
The minister confirmed expectations of a substantial rise in debt levels and a widening budget deficit.
Here are some of the key takeaways:
Budget deficit: The consolidated budget deficit is expected to reach 15.7% of GDP for the current financial year — 2020/2021 — sharply up from February’s estimate of 6.8% of GDP.
Debt to GDP ratio: The government’s debt levels will rise to 81.8% of GDP by the end of this fiscal year. This is compared to an estimate of 65.6% of GDP projected in February. Government aims to stabilise debt at 87.4% of GDP in 2023/24, and is aiming for a primary surplus that year.
Growth forecast: The Treasury expects growth to contract 7.2%, the largest contraction in nearly 90 years. This is substantially worse that February’s forecast of 0.9% for 2020.
Revenue shortfall: Given the hit to the economy, the Treasury expects the revenue shortfall to be more than R300bn.
External support: The government intends to borrow $7bn (R121bn) from international finance institutions
Health care: The budget proposes R21.5bn for Covid-19-related health care spending
Covid-19 loan guarantee scheme: The scheme lent R10bn in its first month of operation.