Ashley anticipates budget cuts to be announced at minister Tito Mboweni's budget speech.
As Finance Minister Tito Mboweni prepares to table one of his toughest budgets on Wednesday (24 June), South Africa’s finance profession is waiting to hear how the government plans to minimise the further impact of Covid-19 on an already weak economy.
In anticipation for the budget speech, University of Cape Town (UCT) CFO and 2020 CFO Awards nominee Ashley Francis says:
“South Africa finds itself in a sovereign debt crisis, meaning we are unable to fund budgeted expenditure. We are expecting an approximate R250 billion plus tax hole in 2020 as a direct result of Covid-19 and we will thus be forced to obtain external loan funding from the IMF.”
He adds that all government departments will have to cope with reduced revenues in 2020 and 2021 and that this does not bode well for the very important work that is required to rescue our already below-par economic growth pre-Covid and definitely post-Covid devastation.
“The badly-run and corrupt-ridden state-owned enterprises will require government bail-outs to ensure sustainability, which is an unnecessary evil that our economy needs to address urgently,” Ashley says.
Ashley says it would not be surprising if UCT, as part of the higher education sector, receives negative growth in state funding for the following year, “albeit that we expect to receive full funding for 2020”.
