Finance minister Tito Mboweni said on Tuesday that the government is considering temporarily topping up social welfare grants as a poverty-relief measure during the Covid-19 crisis.
The pandemic could put as many as a million people out of work and leave those who rely on informal economic activities destitute.
But other than a short mention of the welfare proposal, Mboweni’s briefing was scant with no additional fiscal measures firmly on the table. He said he will table proposals with the cabinet on Wednesday, after which he would have more to say about the government’s response. He would also be able to articulate a “firm position” on social grants by then.
Earlier on Tuesday, Business For SA said it supports a proposal to top-up grants to provide a safety net during the crisis. It estimates that a R500 top-up to all grants would cost the fiscus R9bn a month.
A credit guarantee scheme in which the government acts as a backstop for new credit extended to struggling business is among the proposals the government is considering, as well various structural economic reforms.
“Together with my colleagues in the economic cluster, we have put together a few proposals on how we can further grow the economy. These will be announced shortly. Among the measures we are looking at expanded support for small, medium and micro-enterprises (SMME) lending through the banking system, similar to other countries,” Mboweni said.
The government is also rapidly revising the fiscal framework and re-allocating expenditure on a daily basis from other parts of the government to the health budget, he said. “We have not called this an emergency budget but, at some stage, we will make a consolidated budget statement. We are fully aware it is a moving target. I will have to come to the country and speak about how we see the numbers.”
Among the elements of reprioritisation would be additional healthcare funding; new revenue projections based on lower economic activity; a plan to stabilise debt; and an economic recovery plan. Mboweni’s notes, which were released to the media, also include a mention of economic reform, which would involve “consolidation of public entities and closure of SAA and SA Express”. But when asked whether state-owned airlines would be closed, Mboweni said he is not aware that this was included in the statement.
Global partners
The government is “exploring all funding avenues to finance coronavirus-related programmes ... the funding avenues will not be limited locally, but will include exploring all global partners and international finance institutions. Funding transactions will be announced officially once concluded.”
The National Treasury previously said it will take up a $1bn loan from the New Development Bank and is also looking at the World Bank — from which $60m is under consideration — as well as facilities provided by the African Development Bank.
On the subject of International Monetary Fund (IMF) funding, which has already become politically contentious, the “government is not looking for budget support; we are looking for Covid-19-specific projects. “These programmes are not accompanied by any structural adjustment programme. This is about international resource mobilisation,” Mboweni said.
Tshepiso Moahloli, acting head of asset and liability management at the Treasury, said all funding facilities must be carefully considered. “This is not Pick and Pay. We need to understand the pricing and conditions. These are loans that need to be repaid. There is work that is ongoing and we do not communicate about live transactions.”
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