South Africa’s Budget Deficit to Soar as Economy Contracts Sharply

South Africa’s finance minister has warned that Africa’s most industrialised economy is on the verge of a sovereign debt crisis and its biggest contraction in almost a century, as the country’s coronavirus epidemic gathers pace, the Financial Times reported. The South African economy is likely to contract more than 7 per cent this year because of the pandemic, and “a fiscal reckoning looms” if the country does not control its debts, Tito Mboweni said in an emergency budget update to lawmakers…South Africa’s budget deficit projection for 2020/21 has more than doubled, to about 15 per cent of gross domestic product, said Mr Mboweni. Public debt will surge to four-fifths of GDP, compared with an earlier forecast of two-thirds, as gross tax revenues miss their target by R300bn ($17bn), he said. As a result South Africa risked a “path of bankruptcy” and a debt crisis similar to that faced by Argentina, Mr Mboweni warned. Read more