Seven key points from Tito Mboweni's 'emergency' Covid-19 budget

24 June 2020 - 16:05 By Lynley Donnelly
Finance minister Tito Mboweni delivering the supplementary budget speech on Wednesday, June 24 2020.
Finance minister Tito Mboweni delivering the supplementary budget speech on Wednesday, June 24 2020.
Image: Kopano Tlape/GCIS

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.

- BusinessLIVE


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