South African finance minister Tito Mboweni painted a bleak picture of the South African economy during his emergency budget speech and quoted the Bible in plotting the way forward for a struggling economy expected to contract by 7.2% this year.
In a 40 minute speech Mboweni outlined a package of support for some state owned enterprises warnings of a the dangers of debt and a sovereign debt crisis. He said he was going to borrow $7 billion from international lenders to try to shore up the money-starved economy.
“Enter through the narrow gate for wide is the gate and broad is the road that leads to destruction and many find it. The narrow road is the one that leads to life and few can find it,” says Mboweni quoting the gospel of Matthew in the Bible. He warned that South Africa could face the same fate as the wrecked German economy of the 1920s and Zimbabwe and Argentina in more recent years.
Mobweni said the government’s tax target was likely to fall short by R300 billion making more borrowing inevitable and the repayments crippling with a national debt expected to top R4 trillion by the end of the year. He said for every Rand the country earned it had to spent 21 cents merely paying back debt.
The government has revised its revenue down from R1.43 trillion to R1.16 trillion as COVID-19 virtually shut down the economy for nearly three weeks.
Mboweni said the government was planning to narrow the deficit and stabilize debt at 87.4% of GDP by 2023/24.