Mboweni to deliver ‘special budget’ speech: what you need to know

Finance minister Tito Mboweni will present a “special emergency budget” on Wednesday.

Mboweni is expected to explain how the R500bn package announced by President Cyril Ramaphosa will be used to support the economy during the Covid-19 pandemic.

Here is what you need to know:

Ailing economy

The supplementary budget was necessitated by Ramaphosa’s announcement that government would spend R500bn to save the country’s ailing economy.

In April‚ Ramaphosa announced a R500bn stimulus plan to support the economy‚ save jobs and businesses during the Covid-19 pandemic.

The stimulus plan also included a R200bn loan scheme for businesses‚ which will make up a large portion of the budget being delivered.

Unemployment

Before the lockdown began‚ the country was already facing rising unemployment.

In April the Reserve Bank warned the country could lose about 370‚000 jobs this year to the Covid-19 shock that “has put large portions of the economy into a policy-induced coma”.

“This is a supply shock‚ in the sense that no amount of demand can be satisfied if industries are closed. As the supply side of the economy reawakens after the lockdown‚ however‚ the demand-side aspects of Covid-19 will become more pressing‚” it said.

‘R300bn hole’

Last week‚ Ramaphosa said the lockdown has left “a R300bn hole” in his government’s national budget for this year.

TimesLIVE reported that Ramaphosa told members of the National Assembly that the lockdown had resulted in “a big hole” that cost the economy almost R300bn of what could have been used “to support services and to support our people”.

“That’s a huge price to pay because it impacts on livelihoods. And we’ve not yet counted the jobs that we’re going to lose post Covid-19. As we speak now‚ many people — and I say this with a heavy heart — are going to lose their jobs. It’s this that this government needs to manage.”

DA calls for end of lockdown

On Monday‚ the DA called for the government to immediately end the lockdown and replace it with a standard set of evidence-based safety rules and guidelines‚ where each regulation is directly linked to reducing the spread of Covid-19.

DA shadow minister of finance Geordin Hill-Lewis said Mboweni must present a budget that “builds national resilience” and “helps SA brace for the impact of economic depression”.

“There is no doubt that the ANC-led government will table this ‘emergency budget’ with blood on its hands‚” said Hill-Lewis. “Minister Mboweni must show a credible path to debt sustainability‚ a commitment to lowering the cost of debt‚ and he must ‘hold the line’ on public wages and bailouts.

“Most importantly‚ he must demonstrate a real commitment to sweeping economic reform to get the economy growing. Without deep reform‚ a full-blown sovereign debt crisis is all but unavoidable.”

By: Unathi Nkanjeni

Source: ARENA Holdings.

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