24th April 2020
Own Correspondent
Minister of Finance and Development Planning Dr Thapelo Matsheka has revealed a COVID-19 Economic Response Plan approved by Cabinet will address issues of Wage Subsidy, Tax Concessions, Loan guarantee, National Strategic Reserves, Medical Supplies and psycho-social support.
With the advent of the COVID-19 pandemic, the economic situation has changed drastically, owing to the spread of the virus, the resultant lockdowns and international travel restrictions have had a catastrophic effect on the local economy with no sector spared.
“The global economy is now forecast to fall by 3% (-3.0%) in 2020. A negative 6.1% for advanced economies, and a negative 1% for emerging and developing economies,” said Thapelo Matsheka, Minister of Finance and Development Planning in a televised address to the country.
He said, “The domestic economy will now decline by 13.1% (-13.1%). The contraction is attributed to a sharp decline in major sectors like mining (-33.6%); Trade, Hotels and Restaurants (-32.2%); Manufacturing (-10.0%); Social & Personal Services (-4.8), and Transport and Communications (-4.1%).”
Total revenues and grants have now been revised downwards from P62.4 billion to P48.8 billion in 2020/21, which is a difference of 22 percent from the original budget estimates. Mineral revenue is expected to fall from P20 billion to only P6.7 billion in 2020/21.
De Beers sales sights 3, 4 and 5 are assumed to be cancelled with sight 6-7 down by 50%; while sight 8-10 will be broadly in line with the budget. Non-mineral income tax will fall from P14.2 billion to P12.1 billion, partly to cater for tax concessions to businesses affected by COVID-19. VAT will decline from P8.6 billion to P7.6 billion. Total expenditure has been revised downwards to P59.6 billion, which is a downward revision by P8 billion from the original budget for 2020/21.
According to officials the revised budget deficit is now estimated at P10.8 billion, equivalent to 5.9% of GDP. The Government Investment Account stood at P20.1 billion. The COVID-19 Fund has an amount of P2.06 Billion comprising P2 Billion as Government seed capital and P60 Million as financial donations from the public, companies, NGOs and Development Partners.
The Ministry of Health submitted a request amounting to P2 472 700 995, covering a number of items to address the COVID-19 Pandemic, including laboratory commodities, personal protective clothing and equipment, medicines, linen, accommodation for people on quarantine and operational costs.
“The Committee approved funds for 100 test kits, lab commodities and personal protective clothing and equipment. Other items are being considered,” said Matsheka.
Matsheka maintained the process to disburse them is on-going, with the Ministry of Local Government and Rural Development taking some food hampers from the donated items.
According to estimates the global economy is projected to grow a positive growth of 3.3% in 2020.
The domestic economy is estimated to grow at 4.4% in 2020. The budget was estimated to raise P62.4 billion in total revenues and grants in 2020/21. The projected total expenditure is now P67.6 billion in 2020/21 with a corresponding budget deficit of P5.2 billion, or 2.4% of GDP.
“As at the end of November 2019, foreign exchange reserves amounted to P70.6 billion, equivalent to 14 months of import cover of goods and services. At that time, the Government Investment Account stood at P16.3 billion,” revealed Matsheka.
