Finance Minister Tito Mboweni has issued a serious warning to the public that the South African economy is expected to shrink by a staggering 6% this year, largely due to the coronavirus and associated nationwide isolation.
According to Mboweni, it was only two weeks ago that the national economy, which had already struggled before the coronation events, would shrink by 0.2% this year.
“Then came the coronavirus and everything changed. A triple disaster struck South Africa. First, there is the health disaster. Secondly, there is the global economic disaster. Third, there are the unique features of the South African economic disaster. Just about all good news is that South Africa is not an oil exporter, otherwise we would be even more in trouble, ”Mboweni said.
“The government is doing what it can to help our people with unemployment insurance, medical testing and assistance, social grants and finally food aid to the very poorest communities, but our systems are currently flooded with applications,” said the minister.
Mboweni welcomed the comprehensive reduction of one percentage point in the lending rate as a way to put some money in the pocket of the shocked consumer.
He said another very positive feature where South Africa is significantly better off than almost all other countries is the strength and strict regulation of South African banks.
“Less good news is that the economic consequences of the coronavirus have completely changed our fiscal reality,” said Mboweni. He warned that the national treasury would soon announce comprehensive tax changes.
It will then be submitted to Parliament as proposed legislation, where Members of Parliament can approve it without changes, approve changes, or reject them as a whole.
Almost all leading economic and political observers agree that Mboweni offers two important and controversial possibilities between the lines without saying it straight.
