Covid-19: R500-b budget to ease the impact of lockdown

Covid-19: R500-b budget to ease the impact of lockdown

Economists have welcomed the socio-economic relief measures worth R500bn announced by President Cyril Ramaphosa to address the Covid-19 crisis.

Ramaphosa said a portion of the virus relief funds will be redirected from the current budget and the rest would be sourced from the local unemployment insurance fund and from global partners and worldwide finance institutions.

He added that while the nationwide lockdown had devastated the economy, it was nothing compared to the catastrophic human, social and economic cost if the virus could spread among South African unchecked.

In order to stimulate job creation and enhance businesses, the president is injecting 10 percent of the nation's GDP into the economy.

He said the budget from Mboweni would give an indication of whether a wealth tax would be raised or whether there would be a raid on pension funds.

The president's announcement is very encouraging news, this is a much larger response by government and we need to congratulate the president on this. They have reshuffled expenditure and put out a massive loan-guarantee program.

"If you look at the numbers and the rate at which the infection has gone up, you will realise that at some point we may actually need the kind of human deployment which has never been seen before", Mapisa-Nqakula told local radio.

Chief economist of IQ Business Sifiso Skenjana commented that government was working within its "confines" to address the consequences of the pandemic and its potential to exacerbate inequality.

He said an additional R20 billion will be made to municipalities for emergency water supply, public transport and sanitation, and also to provide food and shelter for the homeless.

A six-month temporary COVID-19 grant of R50 billion.

Child support grant beneficiaries will receive an extra R300 in May and from June to October they will receive an additional R500 each month.

All other grant beneficiaries will receive an extra 250 rand (13.2 US dollars) per month for the next six months.

More than 17 million South Africans who are already receiving social grants from the government will be given more cash to sustain themselves.

The president added that "we will therefore be introducing a R200 billion (10.5 billion USA dollars) loan guarantee scheme in partnership with the major banks, the National Treasury and the South African Reserve Bank".

In the initial phase, companies with a turnover of less than R300 million a year will be eligible, and it is expected that the scheme will support over 700 000 firms and more than 3-million employees.

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