Finance minister to revise budget amid Coronavirus fallout
Finance Minister Tito Mboweni will on Wednesday walk the tightest of ropes when he tables the supplementary budget as the country’s nances face many headwinds.
The impact of COVID-19 on the economy and the government’s R500-billion rescue package has forced the National Treasury to rework the budget and reprioritise the spending announced in the February Budget.
A treasury offcial said Mboweni would announce where money would be reprioritized. He said it was decided that R30bn would repriotised from the provincial budgets.BNP Paribas SA senior economist Jedfrey Schultz said those expecting Treasury’s adjustment budget to provide a feasible debt consolidation strategy will be disappointed.
“Two of the most pressing issues are whether or not SAA and the Land Bank will be granted additional financial support from the state,” he said.
“While Finance Minister Tito Mboweni continues to dig his heels in with regard to further state support for parastatals without proof of a meaningful turnaround in management and operational structure, we think additional financial support to the tune of R20- billion cannot be ruled out.”
North West University economy professor Raymond Parsons said that the revised budget must steer a middle course between economic support today and fiscal sustainability tomorrow.
“With government spending still high partly because of the large R500-billion economic support package on the one hand, and with sharply falling tax revenues on the other, it is unavoidable that public borrowing will soar,” Parsons said.
Trade union federation Cosatu said it expects Mboweni to announce a stimulus plan of not less than R1-trillion to rebuild the economy.
“Anything less will not be able to stop an economic tsunami that is on the horizon. We can no longer accept an unemployment rate of 40% as normal, let alone one of more than 50%,” Cosatu’s Matthew Parks said.