Tito Mboweni has tabled a Zero-based budget, that is aimed at addressing the economical issues brought in by Covid-19. President Cyril Ramaphosa announced a R500 Billion stress relief funds in April, Tito Mboweni was outlining how these funds are going to be distributed in different sectors that are facing financial stress.
A zero-based Budget initially has no amounts set aside for any government department. Each department needed to propose what they want to spend and justify the need. It is then evaluated to see if it is essential, then it can either be approved or denied by the minister.
Tito Mboweni has estimated that the country’s economy will shrink by 7.2% by the end of 2020, debts in South Africa are some of the stumbling blocks for economic growth. South Africa owes over R4 Trillion in total. Now every 21 cents paid in tax will contribute to closing debt holes. An increase in Debt is expected to be hiked up to 81.8% compared to the initial estimation of 65.6%.
The Land Bank was part of the beneficiaries in the budget, as a total of R3 Billion, will be allocated to save Land Bank. Minister said the country could not afford to lose the entity as it would jeopardize Food Security, stressing that it contributes 29% of the Agricultural debts. Meanwhile, there were no funds allocated to assist the Business rescue plan(BRP) meant to save the South African Airways, however the R10 Billion required by the BRP might be included on the October budget once the BRP is finalized. Other struggling state-owned entities like Eskom and the Taxi industry were left in the dark.
The unemployment rate increased by 1% to 30.1%, and the Minister has said this was one of the greatest challenges for the Government.