Finance Minister Tito Mboweni is scheduled to deliver an emergency Budget on Wednesday 24 June. The Budget he tabled in late February is now extinct, and this one will be a blueprint for survival as the economy, and with it, the government’s main sources of revenue, melt down in the face of the Covid-19 pandemic and the lockdowns to contain it.
With the winter solstice behind us, the days are lengthening again in an annual cycle of renewal. But don’t expect any rays of sunshine in Finance Minister Tito Mboweni’s emergency Budget.
One certainty is that the numbers will change, and for the worse.
Four months ago, National Treasury — in a Budget that now reads like a dusty historical relic on display in a museum — was forecasting the economy would grow 0.9% in 2020 with a budget deficit of 6.8% of gross domestic product (GDP). The debt-to-GDP ratio was seen rising to 71.6% by 2022/23 from 61.6% in 2019/20.
Those numbers are now effectively meaningless. The small growth forecast will be replaced by a contraction forecast that will be nothing short of massive. The South African Reserve Bank (SARB) forecast is for a 7% shrinkage,…