The Covid-19 pandemic is expected to deepen South Africa's economic woes, and is expected to push the economy into a deep recession during 2020.

Finance Minister Tito Mboweni has said that Treasury will have to revise the national budget across the board to ensure that the Department of Health has the resources necessary to respond to the outbreak.

Treasury has also been in talks with foreign lenders, including the World Bank, the New Development Bank and the African Development Bank on possible loan facilities- strictly to be used for Covid-19 support. According to Mboweni a facility of $60 million is being considered from the World Bank. The finance minister said that Treasury is considering all options available and will leave no stone unturned in this regard.

While Treasury has also introduced tax relief measures, Mboweni noted that a downturn in tax revenue is also expected due to reduced economic activity.

Treasury will brief Cabinet on Wednesday, on a set of proposals to revive the economy.

When asked if Treasury is considering a basic income grant as part of its efforts to tackle the impact of Covid-19, Mboweni said that no decision has been taken yet to introduce one.

Mboweni said the country is open-minded to resource mobilization from all financial institutions. This includes the World Bank, New Development Bank.

It will be seeking assistance from the IMF for Covid-19 not for budget support.

"We are talking to them about it. We are looking for programmes not accompanied by any structural reform programmes," he said.

"This is an international resource moblisation in addition to our domestic resources," said Mboweni.

The support being sought from the World Bank is $60 million.

Mboweni confirmed that budget revisions will be introduced to ensure that the department of health has sufficient funding to implement its interventions. Mboweni said on basis of current plans and forecasts, Treasury may have to reallocate budgets towards fighting the virus, containing the virus. All things which might not be urgent may have to wait. "We must be careful not to take too many resources away from growth-enhancing initiatives," he said. These revisions will be made available once given the "go-ahead" from Cabinet.

In terms of public wages - the public wages bargaining council is still considering the proposal. Negotiations are still continuing. No decisions have yet been made.

Mboweni says Treasury is in conversations with most financial institutions for possible lending facilities.

Treasury spoke to the World Bank today, and has been considering facilities from the NDB, African Development Bank.

Mboweni said Treasury will leave no stone unturned in terms of evaluating different financing options.

Mboweni said more clarity on the proposed closure on SAA and SA Express would likely be provided following the Cabinet briefing tomorrow.

Among Treasury's fiscal responses to Covid-19 include:

1. Putting forward clear estimates of the additional health care costs that will be needed

2. Reprioritising unnecessary expenditure towards these health care costs

3. The impact of slowdown on our projections for revenue

4. It should be costed as much as possible (how much is needed?);

5. It should be temporary (clear timeline of 1 year);

6. It must be crafted as a 3rd line of defence for the vulnerable

7. A clear timetable or plan to stabilize debt over the current forecast period

8. Supported by an economic recovery plan (structural reforms) and a set of reforms within the fiscal system e.g. passing the RABS (road accident benefit scheme), consolidation of public entities and closure of SAA and SAX

Mboweni says some of these proposals have been mentioned in the past, and others are new.

Mboweni said the Covid-19 crisis is both a health shock and an economic shock.

Shortly before Treasury's teleconference, the Reserve Bank announced a 100 basis point slash in the interest rate to 4.25%.

The rand reacted negatively, weakening 1% to the R18.20/$ level, after trading around R18/$ earlier on Tuesday, Bianca Botes, executive director at Peregrine Treasury Solutions noted.

The rand has reached record lows following the downgrade by Moody's on 26 March 2020 to junk status. Up until then, Moody's was the only rating's agency which had the credit rating at investment grade.

The rand plummeted nearly 5% following the Moody's downgrade.

Just days later, Fitch downgraded the country's credit rating further into junk status. This saw the rand breach the R19/$ mark.

The currency has lost nearly 40% of its value over the past year, which has implications for the cost of imports such as oil, electronic goods and even foods.

So far the Reserve Bank has projected that the 21-day lockdown would see the economy contract by as much as 4%, and that there might be as many as 370 000 job losses.

However the lockdown has since been extended to the end of April, with some economists indicating that the country would experience a deep recession.

Finance Minister Tito Mboweni, and National Treasury is set to hold a briefing via teleconference t 12:00, on the recent announcements by Moody's and Fitch to downgrade South Africa's sovereign credit ratings.

Treasury will also provide insight on recent interventions to limit the economic impact of the Covid-19 outbreak.