Debt is our weakness, says Mboweni

Finance Minister Tito Mboweni has a big task ahead of him. He will deliver his emergency budget speech on Wednesday.

CAPE TOWN - Finance Minister Tito Mboweni tabled an emergency budget on Wednesday aimed at minimising the effects of the COVID-19 pandemic on the economy.

"The storm is not over. But, if we follow the health guidelines and make the right decisions to prepare for a new global reality then, soon enough, the days will grow calmer and our national Aloe Ferox shall go into the new day healthy and strong," Mboweni said. 

The budget intends to stabilise debt, by improving government spending patterns and creating a foundation for economic revival.  

WATCH: Mboweni tables emergency budget

"Debt is our weakness. We have accumulated far too much debt; this downturn will add more," Mboweni said.

Mboweni said a second adjusted budget will be tabled again in October.

He stated this budget will lay the path of the direction President Cyril Ramaphosa gave on 21 April that aims to forge a new economy in the face of the "new global reality".

READ: Emergency budget: What is Tito Mboweni likely to say?

Mboweni drew attention to the impact of COVID-19 on the local and global economy, saying the government anticipates a global contraction of 5.2 percent this year and a local contraction of 7.2 percent.

The minister said the R500-billion COVID-19 stimulus package given by the government is the largest amount that has been given to the "developing world".

The projected consolidated budget spending, including debt servicing costs, will exceed R2-trillion.

READ: Calls for government to double relief fund

Gross tax revenue for the 2020/21 fiscal year has been revised down from R1.43-trillion to R1.12-trillion.

Mboweni stated the government expects to miss the tax revenue target of this year by over R300-billion.

Part of this can be attributed to the outright relief of R26-billion and delays in tax collection of approximately R44-billion, according to the Finance Minister. 


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