Reduced economic activity due to the national lockdown, which was implemented to curb the spread of the Covid-19 virus, has resulted in a huge decline in revenue collection which will inevitably affect budgeting and funding of government programmes.
The Minister of Finance, Mr Tito Mboweni, revealed this to a joint meeting of the Standing Committee on Finance and the Select Committee on Finance, which was held via video conferencing technology for the National Treasury and the South African Revenue Service to brief the committees on their strategic plans and budgets.
“This is a very difficult time and we need to sharpen our minds in finding solutions to lift us from the crisis. The biggest challenge has been the lack of revenue collection due to reduced economic activity and this will affect our plans to fund government programmes,” said the Minister.
Responding to a question on whether he will push for the reopening of more industries in order to get the economy back on track, Mr Mboweni said “the quicker we get to level 2 the better, but we must not be reckless, we need to find a balance between the economy and the health of the people”.
The Chairperson of the Select Committee on Finance, Mr Yunus Carrim, questioned the Minister and the department on whether it was reasonable to “restrict the tender for the procurement of masks to only small businesses, given the fact that the capacity of the small business sector can only produce 45 000 masks”.
He further urged the department to, in supporting small businesses to grow, also take into account other businesses that were not SMMEs (small, medium and micro enterprises).
Mr Dondo Mogajane, the Director-General (DG) of the National Treasury, played down the claims that the tender was “restricted to small businesses only”.
“We are very clear in terms of the instructions that we issued, that it is important that small businesses should play a role in our economy and we should encourage them to flourish – institutions and government are encouraged to buy from SMMEs – we understand that the demand is very high, for instance, the Department of Education will order millions of masks – suppliers can register on the database,” the DG said.
Mr Mboweni also dismissed the claims that the tender for masks was restricted to small businesses only, saying “there should be no impression given that we are excluding large companies from the procurement of health gear”.
“The notion that masks are only going to be bought by government is wrong, that notion must be discarded – people who can afford must buy their own masks, and I think we must support all enterprises,” the Minister said.
Members of Parliament also wanted to know about progress on the establishment of the State Bank and the Sovereign Wealth Fund, plans which were announced in the Budget Speech in February.
“We remain committed to the establishment of the State Bank and the Sovereign Wealth Fund, however, our financial position is not good and our ability to capitalise the State Bank remains challenged, the situation has changed since we spoke in February,” Mr Mboweni explained.
South Africans will only know about which government programmes are going to be prioritised and about cuts, when the National Treasury presents the supplementary budget in the next few months.
By Sakhile Mokoena
5 May 2020