What Cyril plans to do, in detail
President Cyril Ramaphosa and his government have moved swiftly to avert widespread unrest amid the Covid-19 pandemic by responding to pleas to direct resources to millions of hungry South Africans.
The president on Tuesday evening announced an “extraordinary” budget of R500bn to react to the various consequences of the global pandemic which includes a health response, social assistance and an economic aid package.
Ramaphosa, in his address to the nation, noted that while the nationwide lockdown was having a devastating effect on our economy, “it is nothing compared to the catastrophic human, social and economic cost if the coronavirus could spread among our people unchecked”.
The president said the government would follow a phased approach towards ending the lockdown, “guided by the best available scientific evidence, to gradually lift the restrictions on economic activity”.
The allocation of R500bn appears to show Ramaphosa wanting to appease all interested parties as government plans towards a phased reopening of the economy. Ramaphosa is expected to detail on Thursday how this will happen.
Breaking down the make-up of the R500bn budget, Ramaphosa said the increased health care spend of R20bn comes to the relief of the national health department, a sector in need of personal protective equipment and tests.
Civil society and activist groupings have also been heard in their cry to increase social grants and expand grants to unemployed people. The president allocated R50bn to this.
Unions too have been considered in their push for jobs to be protected, with Ramaphosa announcing R100bn for protection of jobs and to create jobs.
Businesses were catered for as the president announced a raft of measures including loan guarantees worth R200bn.
The unprecedented economic package is a product of lengthy consultations the president has had with various stakeholders including leaders from business, labour and the community constituency in Nedlac, as well as with premiers, MECs, metro mayors and members of the Presidential Economic Advisory Council.
As Ramaphosa prepared towards this intervention, he told the ANC’s National Working Committee (NWC) on Monday that he was looking to raise R1-trillion and guaranteed them that any IMF funding would come with no strings attached.
By the time cabinet met on Monday afternoon, the more realistic figure of a R500bn economic intervention was then agreed upon.
“The impact of the coronavirus requires an extraordinary coronavirus budget — of around R500bn — to direct resources towards fighting the pandemic. This will include the reprioritisation of around R130bn within the current budget. The rest of the funds will be raised from both local sources, such as the Unemployment Insurance Fund, and from global partners and international financial institutions,” Ramaphosa said in his address to the nation.
This includes a mix of loans from the World Bank, IMF, Brics New Development Bank and the African Development Bank.
Ramaphosa said R20bn will be allocated to SA’s efforts to address Covid-19.
“If we are to successfully manage the anticipated surge in cases and ensure that everyone who needs treatment receives it, we must provide for additional expenditure on personal protective equipment for health workers, community screening, an increase in testing capacity, additional beds in field hospitals, ventilators, medicine and staffing,” the president said.
Another R20bn has been allocated to municipalities which have seen its revenue negatively affected with a growing demand for services.
The allocation to municipalities will be for the provision of emergency water supply, increased sanitisation of public transport and facilities, and providing food and shelter for the homeless. Details will be announced in the adjustment budget tabled by the minister of finance.
The most immediate response will be felt in the form of social grants with child support grants being increased by R300 in May and an extra R500 thereafter until October.
All other grant beneficiaries will receive an extra R250 per month for the next six months.
“In addition, a special Covid-19 Social Relief of Distress grant of R350 a month for the next six months will be paid to individuals who are now unemployed and do not receive any other form of social grant or UIF payment. The department of social development will issue the requirements needed to access and apply for this funding,” Ramaphosa said.
Ramaphosa said the South African Social Security Agency (Sassa) will soon implement a technology-based solution to roll out food assistance at scale, through vouchers and cash transfers to ensure that help reaches those who need it faster At the same time, 250,000 food parcels across the country will be distributed over the next two weeks.
Ramaphosa said that the coronavirus crises would lead to many people losing their jobs and, as a result, R100bn will be set aside for the protection of jobs and to create jobs.
Added to this is a wide variety of funding including R40bn which has been set aside for income support payments for workers whose employers are not able to pay their wages.
Turning to businesses, Ramaphosa said government will be introducing a R200bn loan guarantee scheme in partnership with the major banks, the National Treasury and the South African Reserve Bank.
“This will assist enterprises with operational costs, such as salaries, rent and the payment of suppliers. In the initial phase, companies with a turnover of less than R300m a year will be eligible,” he said.
Our country and the world we live in will never be the same.President Cyril Ramaphosa
The government is hoping to assist over 700,000 companies and 3 million workers through this programme.
The president further noted a raft of added tax relief measures which is expected to be fully outlined by the finance minister.
Ramaphosa’s R500bn plan will be given life first by the finance minister, who will have to deliver an amended budget for the year.
It will then be up to cabinet ministers to put the president’s announcement into operation. How and when these interventions are carried out will be up to them.
In the meantime, Ramaphosa has two days to prepare for his next announcement to the nation on Thursday which will detail how the lockdown will be “gradually” phased out at the end of the month.
If anything, Ramaphosa was clear that life will not return to normal come May 1. He will detail how businesses will be allowed to open incrementally as well as the plans for the reopening of schools.
“Our country and the world we live in will never be the same,” Ramaphosa said in his concluding remarks.
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