BRIAN KANTOR: State must raise emergency funds it intends to spend as cheaply as possible
The SA government will double its fiscal deficit in response to the coronavirus crisis and its effect on output and incomes, which may be of the order of R1-trillion, the equivalent of 25% of GDP in 2019. We can only hope the extra spending is effective and well directed to minimise the damage.
Spending will help close the output gap — the difference between much lower realised GDP and what it might have been without the lockdown. Encouraging more demand for goods and services will helpfully also increase their supply and boost incomes accordingly.