Image c/o the department of international relations cooperation
South Africa must cut spending to avoid a sovereign debt crisis within the next four years, finance minister Tito Mboweni has warned.
Mboweni is preparing to deliver a revised budget on 24 June that will reflect the devastation wrought on the economy by the coronavirus pandemic, he told MPs on Thursday in Cape Town.
We are much, much poorer and therefore all of us have to adjust our expectations
The adjustment budget Mboweni is preparing will redirect R130-billion in the R500-billion coronavirus stimulus package President Cyril Ramaphosa announced in April.
The fiscal deficit is likely to be double the 6.8% of GDP he projected in February, and forecasts for government debt could be close to 80% of GDP.
Zero-based budgeting
Mboweni said the government must consider adopting a zero-based budgeting system, in which funds are allocated according to the state’s revenue base.
