Finance Minister Tito Mboweni says COVID-19 expenditure has changed the fiscal framework and he will soon be tabling a new Budget Bill before Parliament.
Mboweni was addressing the media in Pretoria.
He has confirmed that National Treasury is in talks the Brics Bank, International Monetary Fund (IMF) and the World Bank to access funding set aside to fight the COVID-19 pandemic.
Government plans to raise R370 billion from both local and international sources.
Mboweni says government will also postpone some of its programmes so that it can re-allocate R130 billion in expenditure.
Mboweni says the Reserve Bank’s measures increase the amount of assistance to over R800 billion in interventions to assist the economy and the fight against coronavirus.
Minister @tito_mboweni briefs media on the #R500billionPackage says: A special Covid-19 Social Relief of Distress grant of R350 a month for the next 6 months will be paid to individuals who are currently unemployed and do not receive any other form of social grant or UIF payment.
— National Treasury (@TreasuryRSA) April 24, 2020
Government’s measures include an additional R20 billion to address the pandemic and R50 billion to increase social security measures like increased grants.
The Reserve Bank has dropped rates by two percentage points.
Minister Mboweni says he has been in constant talks with Reserve Bank Governor Lesetja Kganyago. He believes the South African economy will rebound in 2021 and be on a trajectory of growth, following a downturn during the coronavirus pandemic.
DA welcomes tabling of new budget
The Democratic Alliance (DA) has welcomed Minister Mboweni’s announcement.
On March 28, the official opposition urged government to table a new emergency budget after Moody’s downgraded the country’s credit rating to junk status. This was also at a time when South Africa was beginning to feel the economic impact of the the coronavirus.
“Mboweni’s new budget should detail where the government has cut R130 billion in spending to fund part of the R500 billion economic support package. The budget should also be bold enough to cut bailouts to zombie state owned entities, and set the economy on a path of meaningful structural reform. Minister Mboweni should also use the budget presentation to lay out the details of loan applications and their accompanying loan terms from international finance institutions like the IMF,” suggests the party.
The DA says it is willing to work with government to turn South Africa’s fortune around and get the economy back on track.
Small businesses concerned
Meanwhile, the National Small Business Chamber has expressed concern over how small businesses will cope until the final stage of the lockdown without some grant assistance from government.
As the coronavirus cases continue to rise, President Cyril Ramaphosa has announced a phased reopening of the economy and a R500 billion stimulus package.
Addressing the nation on Tuesday night, President Ramaphosa said South Africa is set to forge a new economy in a new global reality after the coronavirus pandemic settles.
The economic impact of the virus has hit businesses and individuals hard, with many people being left without jobs since the start of the national lockdown on 27 March 2020.
In the video below, the opening of critical industries is under discussion: