President Cyril Ramaphosa outlined a number of plans to limit the social and economic impact of the coronavirus during an address on 21 April.
Chief economist of the Efficient Group, Dawie Roodt highlighted some of the key points Ramaphosa made during the address.
Ramaphosa announced a R500-billion economic and social support package. “There are a number of additional spending items such as an additional R20 billion going to municipalities and especially to support water transport and food and shelter expenses,” said Roodt.
He highlighted that there are some significant increases regarding grants which will cost an additional R50 billion. Child support grant beneficiaries will receive an additional R300 in May and an additional R500 from June to October. Other grant beneficiaries will receive an additional R250 a month for six months. Those who are unemployed and not receiving an income from anywhere else will receive R350 a month for the next six months.
“An interesting scheme is the R200-billion loan guarantee that will be provided through the banks and that will be used to support certain businesses. This guarantee will come from the tax payer or treasury but we need more information about that.”
Roodt added, “The president ended his speech by saying the certain structural adjustments will be required and that we need a new social compact [an agreement among the members of a society to cooperate for social benefits] in South Africa. Something I completely and totally agree with, I’m not so sure that I will 100 per cent agree with the kind of changes the president is envisaging.”
He highlighted that while the coronavirus has certainly impacted the economy, he believes that the ‘mismanagement of the economy by the government’ has only contributed to many of the problems citizens are now facing.
“I am concerned that in future we are going to see a significantly bigger state intervention and we know from experience that usually, or always, that it doesn’t end well,” concluded Roodt.
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