Mboweni emergency budget ‘most important in history’

Mboweni emergency budget ‘most important in history’

Senior economist Duma Gqubule believes the Supplementary Budget to be tabled on Wednesday will contain the toughest set of numbers since the dawn of democracy.

Tito Mboweni

Finance Minister Tito Mboweni is set to table the adjusted budget, which had to be drawn up in response to the COVID-19 pandemic, on Wednesday.

“We are facing the most important budget in post-apartheid history, and unfortunately the Finance Minister is going to disappoint,” says Gqubule.

“What we need now is a massive stimulus to limit the contraction of GDP and kickstart a recovery. That is what we need right now. 

“But the Minister will come with zero-base budgeting and austerity which is going to make the crisis worse.”

Wednesday’s emergency budget comes at a time where the country’s already struggling economy is facing even more headwinds due to the COVID-19 pandemic.

Gqubule predicts that economic growth will again be revised downwards.

He also estimates that debt-to-GDP will double. 

“The second thing is the debt-to-GDP ratio. The debt was forecasted to R370 billion. I think it will be double to R750 billion. All of this happened in the last four months,” he says. 

Gqubule doesn’t believe the country’s ailing state-owned enterprises will feature highly on the agenda on Wednesday.

This is in spite of the fact that Treasury’s economic reform document is making it clear that the continuous bailing out of failed SOEs had to come to an end. 

“We are going to see no decision on state-owned enterprises. His budget, I believe, will kick off a downward spiral of the economy,” adds Gqubule. 

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