Finance Minister Tito Mboweni will on Wednesday present his emergency supplementary budget as the economic fallout of the coronavirus (COVID-19) pandemic continues to intensify.
The budget was already delivered in February, but then things changed.
The COVID-19 pandemic hit South Africa and the government said it would have to loan additional funds and reallocate some spending towards health and more social grants.
Economists say the budget is likely to show an economy in depression, with falling GDP numbers and an expected debt of 100% of GDP expected in 2024.
The country is facing its worst jobs bloodbath in a decade, escalating debt and an expected shortfall in tax collection of more than R300 billion.
The country is also likely to borrow more from international financial institutions. Economist Dawie Roodt has warned the minister will not be the bearer of good news.
“I have been analysing the state finances for many decades and it’s the first time I am aware of where we have an emergency budget and it’s an indication of how severe and how serious the South African economy finds itself. Like for example what is the likely under a shock of tax collections in the current financial year I expect that tax collections will be R300 billion less than originally estimated? On the spending side, we would like to know where the minister is going to get all this money. Is he going to spend even more money.”
Anticipated budget speech
The supplementary budget will be one of the most anticipated budget speeches of Post-Apartheid South Africa as it is expected to make considerable changes to the current budget.
Economist Yamkela Makupula elaborates on what an emergency budget means.
“All the financial plans that you had at the beginning, will have to re-look at that and say what can we do and that is why the supplementary budget has to happen. You have to go back to the drawing board and re-prioritise on how we are going to allocate the funds. The country, the economy still needs to continue, social grants still need to be paid. All of those municipalities. But then a lot of money has gone into emergency funding”.