Minister of Finance Tito Mboweni. Photographer:Phando Jikelo/African News Agency(ANA)
Minister of Finance Tito Mboweni. Photographer:Phando Jikelo/African News Agency(ANA)

Mboweni had to adjust his medium-term budget due to Covid hit economy

By Siphelele Dludla Time of article published Oct 14, 2020

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JOHANNESBURG - Finance Minister Tito Mboweni has written to Parliament requesting the Speaker of the National Assembly to enable him to postpone the medium-term budget by a week.

In a statement on Wednesday, the National Treasury said Mboweni now wants to table the 2020 Medium Term Budget Policy Statement (MTBPS) on Wednesday 28 October.

The MTBPS, which sets out South Africa’s macroeconomic policy in the medium-term, was initially scheduled for tabling on Wednesday, 21 October.

Treasury said that the Speaker Thandi Modise has acceded to the request subject to the approval of the Parliamentary Programming Committee.

It said that Mboweni has had to adjust the approach and consultation of the budgetary process due to Covid-19 induced economic downturn.

“The Minister has made this request having taken into consideration the complex and unusual circumstances visited upon us by the Covid-19 pandemic, which included the tabling of a Supplementary Budget in June.”

Mboweni’s budget will be closely watched by jittery investors and credit rating agencies on how the government plans to curb spending and rein in the growing public debt and fiscal deficit.

The economy is expected to contract by 7.2 per cent in 2020, the largest contraction in nearly 90 years.

The gross national debt rising to R4 trillion, or 81.8 percent of GDP by the end of this fiscal year.

The government plans a debt stabilisation programme through zero‐based budgeting that will narrow the deficit and stabilise debt at 87.4 percent of GDP in 2023/24.

Treasury on Wdnesday said the government was determined to maintain a prudent fiscal stance which is in the best interest of the country in the medium and long-term and the MTBPS will reflect this position.

South Africa’s sovereign credit rating has been downgraded below investment status by all three major rating agencies as the country’s fiscal position continues to deteriorate.

Ahead of Mboweni’s budget, President Cyril Ramaphosa will tomorrow unveil the widely consulted Economic Reconstruction and Recovery Plan to Parliament.

Ramaphosa’s plan comes after extensive consultations with various stakeholders after the Covid-10 plunged the economy into an unprecedented crisis in the second quarter, with 2.2 million jobs lost during the period.

The markets have been jittery and closed in the red yesterday as rising numbers of Covid-19 cases worldwide and concerns about a halted coronavirus vaccine trial weighed on investor sentiment.

The JSE All Share index declined 0.9 percent yesterday to settle at 55 054 index points.

Yesterday, the rand strengthened against the US dollar after the pace of contraction in South African annual mining production eased off in August, hinting that the industry may be one of the first to regain some of the ground lost to the Covid-19 pandemic.

BUSINESS REPORT

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