SA's economy expected to shrink by 7.8%
Finance Minister Tito Mboweni says the economy is expected to contract by 7.8 percent this year.
Mboweni tabled the Medium-Term Budget Policy Statement in the National Assembly on Wednesday.
The economy has been hard-hit by the unprecedented Cvid-19 pandemic, which affected jobs and businesses
Mboweni said a sharp global recession is underway.
"We need to get the economy to grow so we that we can collect more tax and therefore have better fiscal sustainability. The International Monetary Fund now expects global output to contract by 4.4 percent in 2020, before rebounding to 5.2 percent in 2021."
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Mboweni announces extension to R350 Covid-19 grant
Mboweni tabled the Medium-Term Policy Budget Statement in the National Assembly on Wednesday. "The Cabinet has decided to extend the Social Relief of Distress grant to the end of January 2021. Because this grant is so effective in reaching the unemployed, we propose to redirect R6.8 billion from the public employment programme allocation," he told MPs.
He said the country is currently borrowing at a rate of R2.1 billion a day, something that cannot continue.
"Countries that find themselves in default usually see sharp GDP contractions in and major currency depreciation," he said.
"On current trends, more of our taxes are being transferred to bondholders who hold our debt rather than to critical services for our people"
Mboweni warned that an uncontrolled increase in borrowing costs would harm small businesses, ordinary South Africans, and the poor the most.
