South African Finance Minister Tito Mboweni warned that a fiscal crisis looms for the nation, which was already in a recession before the global pandemic deepened its economic slowdown, according to a report by Johannesburg-based Fin24.
If domestic banks and institutions were to remain the largest holders of South African bonds, a fiscal crisis could spread to banks and the financial system, Mboweni said during a panel discussion on Friday, the website reported.
Any failure by South Africa to take measures could bring on a crisis as early as 2024, he said, pointing to the economic meltdown experienced in Argentina as an example.
His mid-term budget, due later this month, wouldn’t be popular as it would “deal with” issues like the heavily indebted national airline and other state-owned enterprises, Mboweni said
“Disturbing” recovery plan
Mboweni’s warning comes amid a report by the City Press that the ANC government’s economic recovery plan presented at a cabinet meeting earlier this week was “terrible, archaic, and disturbing”.
Speaking to the publication, analysts described the plan that was proposed by the ANC to facilitate economic growth following the impact of COVID-19 as “a list of items with no strategic thinking”, which looked like it was “written by an intern”.
Last month, Stats SA published its Quarterly Labour Force Survey for the second quarter of 2020, which revealed the terrible effect of the COVID-19 crisis on the economy.
The data showed that more than 2 million people lost their jobs over the period, with the number of employed persons decreasing to 14.1 million.
The number of people classified as “not economically active” increased by 5.6 million.