Finance Minister Tito Mboweni has sounded an ominous warning about the state of South Africa’s coffers in the wake of the ongoing Covid-19 lockdown.
“One of the things that have become clearer is that we have to adapt to changing circumstances. We are no longer as rich as we used to think we are. We have to adapt to a new situation, think seriously about going to zero-based budgeting,” he told a National Assembly debate on the 2020 Appropriation Bill.
This means the country’s budget will have to be re-allocated from scratch and there will have to be a reduction in government expenditure.
The Treasury will table an emergency budget on 24 June to cope with the changing circumstances.
Already the economy is predicted to contract by 7% this year because of the Covid-19 crisis and resulting lockdown.
“Most sectors of our economy are in dire straits, from construction to the retail sector, to mining, they are all in difficulty. We need to be brave and determined to implement structural reforms,” Mboweni said.
The country’s tax revenue has declined very sharply because of the lockdown.
“We, therefore, need to refocus our attention to what is now feasible and how we can help our people during Covid-19 and still be able to support our economy going forward,” he said.