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· South Africa’s National Treasury will allocate the remaining R45 billion rand of a coronavirus-relief package in October, which many feel is the final tranche of spending on that count
· South Africa’s gross domestic product will probably contract 7.2% in 2020 and the consolidated budget deficit is expected to surge to 15.7% of GDP this year and gross debt-to-GDP is likely to peak at 87.4% in 2023-24, according to government sources
South Africa’s National Treasury will allocate the remaining R45 billion rand of a coronavirus-relief package in October, which many feel is the final tranche of spending on that count. While President Cyril Ramaphosa announced a R500 billion Covid-19 package in April, the National Treasury outlined plans to spend R455 billion in a special adjustment budget presented recently. The plans for the remainder will be outlined in the October medium-term budget policy statement and the February budget review.
The spending is hampered by lack of readiness of certain projects, such as the job-creation program and a further deterioration in the fiscal position. The National Treasury is seized of these issues. The total stimulus package will remain at R500 billion, even though the supplementary budget process identified only R145 billion for immediate allocation. The new grants will require a further reprioritization of spending.
South Africa’s gross domestic product will probably contract 7.2% in 2020 and the consolidated budget deficit is expected to surge to 15.7% of GDP this year and gross debt-to-GDP is likely to peak at 87.4% in 2023-24, according to government sources. The country is counting on US$7 billion (about R12 billion) from multilateral lenders and development finance institutions to support its response to the pandemic. The New Development Bank, which serves the BRICS nations, has approved a US$1 billion facility. The country asked the International Monetary Fund for a US$4.2 billion loan at the end of April and plans to request up to US$2 billion from the World Bank.
