- The Minister of Finance is expected to present a special emergency budget this week
- Tito Mboweni is expected to table how the "second phase" of the R500 billion package will work
- Mboweni has also called for "zero-budgeting" as a means to save funds
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Minister of Finance Tito Mboweni is expected deliver a special emergency budget during this week when he will lay out a new financial framework to respond to the Covid-19 pandemic.
The budget will be presented on Wednesday, 24 June and comes at a tumultuous time for the South African economy.
Before the lockdown began, the country was already facing a slowed-down gross domestic product growth, rising levels of unemployment, ratings downgrades, an increasing debt-to-GDP ratio along with multiple other red flags on key economic indicators.
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Last week Thursday, Mboweni told the National Council of Provinces (NCOP) during a virtual meeting that if South Africa did not change its spending behaviour, the country would fall into a sovereign debt crisis by 2024 and be forced to go to the International Monetary Fund for help.
Fin24 reported that Mboweni is not one to hold his tongue back and has often held views in disagreement with the institutions he represents.
Mboweni is expected to table what may be the toughest budget in South Africa's entire history, said CapeTalk.
In April, President Cyril Ramaphosa announced a R500 billion stimulus plan, including a R200 billion loan scheme for businesses, which will make up a large portion of the budget being delivered this week.
Mboweni is expected to present how this stimulus will be structured as the ‘second phase’ response to the Covid-19 pandemic and where the R130 billion in reprioritised funding will come from.
Mboweni has called for "zero budgeting", a system of starting the budget from scratch, meaning every line item must be analysed for need and cost; no funding may be assumed, no matter what happened in previous years.
Briefly.co.za reported earier that a municipal manager in the Steve Tshwete Muncipality received a 48% salary increase because of a three-year agreement. This is something that would not happen under zero-budgeting.
In a zero-based budget, every department would have to justify its expenditure from a “zero-base” – a massive undertaking. Ramaphosa appears to support this idea.
Chief Economist at IQ Business, Sifiso Skenjana, said zero budget is "really progressive, given the fruitless and wasteful expenditure we have had".
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