By Fadia Salie
Finance Minister Tito Mboweni turned to the scriptures more than once in his supplementary budget speech to explain South Africa’s dire economic situation amid the Covid-19 pandemic.
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Likening South Africa’s debt situation to an “open-mouthed Hippopotamus eating our children’s inheritance”, he said if the country doesn’t act now and stabilise debt, it will find itself on the path to bankruptcy.
Among the startling takeaways from the budget were that the gross national debt will be close to R4 trillion, or 81.8% of GDP by the end of this fiscal year compared to an estimate of R3.56 trillion or 65.6% of GDP projected in February and the budget deficit is projected to be 15.7% of GDP vs its 6.5% February projection.
And as South Africa prepares for the largest economic contraction in nearly 90 years – GDP is projected to contract 7.2% this year –  the minister reallocated funds to serve the pressing needs brought on by the Covid-19 pandemic.
He increased the national share of the 2020 Budget from R758bn to R790bn, while decreasing the provincial share from R649bn to R645bn.
Local government, which he said was at the heart of SA’s response to the pandemic, got R7bn added to their share to R140bn.
He accorded an additional R11bn to local government through the equitable share and said a further R9bn will be reprioritised within allocated conditional grants to fund additional water and sanitation provision and the sanitisation of public transport.
The R100bn loan guarantee scheme lent over R10bn to small businesses in its first month and many more applications are being processed, he said. He said, as most of the economy is opening for business under lockdown level 3, the government-backed loans scheme will now also include a business restart option, and be available to businesses with turnover of more than R300m.
The Land Bank received a R3bn allocation to recapitalise as it holds 29% of South Africa’s agricultural debt.
