As speculation mounts about whether Finance Minister Tito Mboweni will revise the 2020/21 budget, it has emerged government has initiated talks to launch a massive infrastructure project to kick-start and boost the economy once Covid-19 has run its course
to launch a massive infrastructure project to kick-start and boost the economy once the Covid-19 coronavirus pandemic has run its course.
A senior government official with knowledge of the talks said that, although officials at Treasury were preoccupied with dealing with Covid-19, they were already thinking about how to resuscitate the economy once the deadly virus was gone. Maybe not necessarily an entirely new budget, but a significant review of the initial budget is inevitable. We have no choice; the world has changed dramatically. We may have to cut the budget by more than R260 billion. We may be forced to not increase wages above inflation. What I am saying is that we have to go back to the drawing board.”
As such, there will be massive under-collection by the SA Revenue Service [Sars]. There is a correlation between economic activity and revenue collection. There will be subdued economic activity in the next three months and we will have a deep recession.” While details about the infrastructure programme are sketchy at the moment, the official said the multitrillion-rand scheme, which could last for between three and five years, would incorporate projects on energy, transport and logistics, rail, education, housing, health, dams, and roads.
As the economy declined, unemployment levels would increase dramatically and, as companies retrenched, the country’s tax base would shrink and the deficit on the budget would rise, he said, adding that the implications for government were big.
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