The central bank sees gross domestic product shrinking by 7%, which would be the deepest contraction since the Great Depression, when output fell by 6.2% in 1931.<\/p>\n As restrictions that shuttered all economic activity except essential services for five weeks from March 27 are gradually being lifted, infections are surging.<\/p>\n While in February South Africa\u2019s budget deficit as a percentage of GDP was forecast to widen to a 28-year high, it\u2019s now expected to be double that, reaching wartime levels.<\/p>\n The restrictions hit revenue collection because many businesses couldn\u2019t operate for several weeks while others shut down permanently.<\/p>\n Mboweni said in April that the tax take could fall by 32% and the fiscal shortfall could swell to more than 10% of GDP, but a Bloomberg survey done this month showed it could reach 13.7%. The largest deficit on record was 11.6% of GDP in 1914, followed by 10.4% in 1940.<\/p>\n A key part of the supplementary budget will be redirecting R130 billion ($7.5 billion) of spending to help pay for the 500 billion-rand package President Cyril Ramaphosa announced in April to shore up the economy and support those worst affected by the virus.<\/p>\n The government is counting on accessing more than $5 billion from multilateral lenders and development banks. While it\u2019s been granted a $1 billion emergency loan from the New Development Bank, $4.2 billion requested from the International Monetary Fund has not yet been approved.<\/p>\n Mboweni would have to outline steps to cover expenses, either by more borrowing or tax measures. However, new or increased taxes are usually only announced in the main budget in February and higher levies could add even more strain to economic growth.<\/p>\n The government\u2019s\u00a0borrowing requirement for the fiscal year ending March 2021 was set at R432.7 billion before the virus struck.<\/p>\n Debt levels will probably exceed 100% of GDP in 2025 and rise to almost 114% before the end of the decade, according to a\u00a0document<\/a>\u00a0presented by Mboweni to the National Economic Development and Labour Council last week.<\/p>\n These preliminary estimates show gross government debt climbing to 80.5% of GDP in this fiscal year, compared with a projection of 65.6% in February.<\/p>\n \u201cIn the short term, government will have no choice but to live on debt,\u201d Nolan Wapenaar, a fund manager at Anchor Capital, said in an emailed note.<\/p>\n \u201cHowever, its current pace of borrowing is not sustainable and even our domestic market will, at some point, battle to finance government at the current pace of bond issuance.\u201d<\/p>\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2020\/06\/Recession.jpg\")
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