WRAP | Mboweni argues for hiring more South Africans in post-lockdown economy

Speaking about how economic package will be funded, Mbownei says all govt programmes that can be postponed will be postponed, and the proceeds reallocated. 

Mboweni says the private sector, in conversation with National Treasury and Reserve Bank, had come to the conclusion that SA can unlock between R100bn and R200bn through the national credit guarantee scheme. 

“That scheme would favour businesses that are R300 million or less, in turnover”. 

The profits and losses would revert back to the nation fiscus, he notes. 

He says that that tax relief measures would also unlock additional funds, and “put more money in the pockets of people”, “get the weeks of the economy moving”. 

He says that in addition to this, the private banking sector has announced a separate set of measures to support clients, such as postponing mortgage requirements. 

“We need to think beyond the role of the state alone,” he adds. 

He now talks about the IMF and the World Bank, notes SA is a member of both.

“We are entitled to approach the IMF and the World Bank for funding,” he says.  

Mboweni now starts to lay out the support intervention packages 

* R20 billion added to the health budget 

* R50 billion increase in social security, by an increase in the existing grant system. In addition, aCovid-19 grant of R350 a month will be paid to the unemployed who have no income.  

* Tax relief measures – including fast-tracking VAT relief funds, a delay of the carbon tax payments, some corporate tax breaks on interest expenses and assesses losses; and UIF support for workers.  

Mboweni notes that the Solidarity Fund has already spent over R1 billion in buying protecting equipment. 

The minister says the combined effect of these revenue and expenditure measures have naturally changed the fiscal framework, adds that for the next few weeks they can be contained within the current budgetary framework. 

He notes that the government is working on tabling a revised budget bill before Parliament. 

Mboweni says National Treasury has been in multiple discussions with Lesetja Kganyago, governor of the South African Reserve Bank. 

The combined fiscal and monetary policy interventions amounts “well over” R800 billion, he says. 

This includes five main components 

*an extra R20 billion health budget 

*relief of hunger and social distress 

*support for companies and workers

*the phased-in reopening of the economy 

*supportive monetary and banking financial market measures 

Ramaphsoa gave few details about how the R500 billion would be made up on Tuesday.

He did say that the R500 billion would include the reprioritisation of around R130 billion within the current budget, and R200 billion in a loan guarantee scheme in partnership with the major banks. 

In addition to some tax relief, the president said the remainder of the funds will be raised “from both local sources, such as the Unemployment Insurance Fund, and from global partners and international finance institutions”.

On Thursday, in his second major address to the nation within a week, Ramaphsoa gave a broad outline of how SA would work to again open up the economy, saying the country would be instituting a five-level coronavirus response system that would govern social interaction and the economy. 

SA is currently and level 5, and would be moving to level 4 on May 1. 

As has become the norm, ministers will provide the details of how Ramaphosa’s announcements will be implemented. 

An inter-ministerial briefing was scheduled for Friday morning to flesh out Ramaphosa’s announcement but was postponed. It now looks like ministers will speak about their areas at a series of separate media engagements in coming days. 

Finance Minister Tito Mboweni, and officials from National Treasury, will be first up, speaking at 2pm on Friday.  

On Tuesday evening President Cyril Ramaphosa announced a R500 billion social relief and economic support package in a bid to stabilise the economy, address the extreme decline in supply and demand and protect jobs. 

The announcement was by far the biggest intervention the government had taken to buoy the economy since the imposition of a nationwide lockdown at the end of March to suppress the spread of the coronavirus. 

Under a raft of strict regulations enforced by the police, only businesses seemed essential – such as pharmacies and food retailers – were allowed to continue operating. The lockdown caused much of SA’s economic activity to be frozen almost overnight, with restaurants, cinemas, gyms, fast food outlets, pubs, shebeens and malls all forced to shut. Travel restrictions mean that SA’s important tourism industry has been ravaged, while much of the country’s mining industry was placed under care and maintenance, although regulations have since been relaxed. 

Business bodies have forecast that SA may lose around million permanent jobs due to the abrupt shock, while the IMF expects that what it is calling the “Great Lockdown” will cause the worst global recession since the Great Depression.