02 Feb 2021

The local economy contracted by nearly 25 per cent in the period March to June last year and experienced deep recession due to COVID-19.

 This was said by Minister of Finance and Economic Development Dr Thapelo Matsheka when presenting the 2021/22 budget proposals February 1.

“Our national income has been reduced and as a nation we have become poorer than we were before COVID-19,” he said.

Dr Matsheka said the situation  had caused serious stresses and stresses that had to be managed.

He said besides slower economic growth, the impact of the pandemic had been manifested in the balance of payments and fiscal deficits as well as drawdown of the foreign exchange reserves and government savings.

“Fortunately, our past record of prudent macro-economic management meant that we had accumulated financial buffers that enabled us to quickly respond to and mitigate the negative impact of the pandemic. These have been depleted and have to be rebuilt for the country to deal with future shocks,” he said.

Dr Matsheka said several sectors such as tourism, entertainment and arts, including bars and liquor outlets had also been severely impacted by public health restrictions that had to be instituted to fight the spread of COVID-19.

“The mining and transportation sectors and some personal services also suffered a major blow,” he added.

He said in recognition of such challenges, government had launched an Economic Recovery and Transformation Plan (ERTP) to fast track recovery and transformation, as well as enhance medium to long-term economic resilience.

The minister said the pandemic had further reinforced the importance of the five national priorities laid out in the mid-term review of the eleventh National Development Plan (NDP 11) and the ERTP.

The five priority areas include promoting export-led economy, ensuring more efficient government spending and financing, building human capital, provision of appropriate infrastructure and strengthening resilience. ENDS