SA's economy expected to shrink by 7.2%
South Africa's economy is expected to shrink by 7.2% in 2020 because of the impact of the global coronavirus crisis.
Finance Minister Tito Mboweni tabled his Supplementary Budget in Parliament on Wednesday.
"This is the largest contraction in nearly 90 years. Inflation will likely register 3 percent in 2020, in line with the outcome of this morning.
"Commodity price increases and a weaker oil price have softened the blow, but as a small open economy reliant on exports we have been hit hard by both the collapse in global demand and the restrictions to economic activity," says Mboweni.
He says the country has accumulated too much debt.
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"This year, out of every rand that we pay in tax, 21 cents goes to paying the interest on our past debts. This indebtedness condemns us to ever-higher interest rates."
Mboweni says the gross national debt is set to near R4 trillion by the end of this fiscal. That's 81 percent of our GDP.
"This is compared to an estimate of R3.56 trillion or 65.6 per cent of GDP projected in February. Without external support, these borrowings will almost entirely consume all of our annual domestic savings.
"Government intends to borrow about $7 billion from international finance institutions to support the pandemic response."
Last month, government announced a R500 billion COVID-19 economic support package.
