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In what is surely the most ambitious government spending effort in the democratic era, which could reach the pockets of millions of impoverished and vulnerable South Africans, President Cyril Ramaphosa outlined on Tuesday a huge R500 social and economic spending plan. a billion to buffer some of the effects. of the coronavirus in South Africa.
This as the country faces the possibility of increased hunger riots, a million lost jobs, and the severe entrenchment of poverty in a society already burdened with high levels of poverty and unemployment.
As of Tuesday night, the number of confirmed cases of Covid-19 in South Africa was 3,465, the health department said.
In a televised speech Tuesday night, Ramaphosa said the R500 billion plan, which translates to approximately 10% of GDP, encompasses an “extraordinary” health budget, alleviating hunger and social distress in the form of subsidies; support to companies and workers, especially spaza shop owners and small businesses; and tax relief for companies in difficulties.
It will be financed in part by international financial institutions and redirecting funds already allocated in the current budget.
The main interventions announced on Tuesday are:
- R20 billion directly for fighting the pandemic. This includes expenditures on protective equipment for health workers, additional ventilators, personnel, medicine, field hospitals, and community exams.
- R20 billion for municipalities to supply emergency water supplies, disinfect public transport facilities, as well as feed and house the homeless.
- R50 billion for new grants, grant recharges and other measures to alleviate social distress.
- R100 billion for job protection and job creation.
- R40 billion for income support payments for workers whose employers cannot pay wages.
- R2 billion to help spaza store owners and small businesses.
- A loan guarantee scheme of R200 billion from banks, the National Treasury and Banco de la Reserva SA.
- R70 billion in tax relief plans for companies in difficulties.
In addition, taxpayers who donate to the Solidarity Fund may claim 10% as a percentage of their taxable income.
‘Devastating‘ impact on the economy
Ramaphosa said that the “urgent and dramatic measures” taken by the government to stop Covid-19 have saved tens of thousands of lives and that they are “absolutely necessary.”
But, he added, this was having a devastating effect on the economy.
It is feared that this is enough to tip economically vulnerable households below the poverty line.
Some estimates have put the total damage to the economy as a result of the Covid-19 blockade into a recession of between 6 and 8%, with one million jobs lost.
READ | Unemployed will receive R2 100 each in Covid-19 payments for 6 months, children R2 800 extra
A 2018 study found that only a quarter of South Africans can be considered middle class or elite class, while the rest live in or near poverty. The same study found that three out of four children under the age of 15 live in poverty.
Protests over food shortages have already been seen across the country, and the SA Social Security Agency is overwhelmed by requests for food packages, receiving 9,000 calls per hour.
Scholarships and aid for the poor
Civil society has openly expressed its call for more aid, especially for the unemployed and informal employees.
So perhaps the most important measure introduced by Ramaphosa was the use of existing social security infrastructure to distribute millions of rands to the poorest in society through subsidies.
Various institutions, academics, activists, and economists had asked for some form of grant, be it in the form of a new grant, a reload of the child support grant or all grants, or the distribution of cash to the poorest in society.
Ramaphosa seems to have adopted all of these suggestions including:
- A six-month temporary grant for coronavirus.
- An increase in the child support subsidy from R300 in May and R500 from June to October.
- An additional R250 for other grant recipients over the next six months.
- One R350 Covid-19 social relief grant per month for six months for unemployed persons who do not receive any other allowance or payment from the Unemployment Insurance Fund.
- The deployment of coupons and cash transfers to those in need of food assistance.
- The distribution of 250,000 food packages in the next two weeks (a partnership between the Solidarity Fund, NGOs, community organizations and the Department of Social Development).
Money
The R500 billion plan will be financed by R130 billion, which will be re-prioritized from the current budget. The rest of the money will come from international financial institutions such as the World Bank, the International Monetary Fund, the New BRICS Development Bank and the African Development Bank, all of which have been contacted for funding, Ramaphosa said.
This will be seen as a direct snub to the ANC, which previously rejected any mention of approaching international lending institutions.
Tuesday’s announcement followed a cabinet meeting on Monday, where ministers made presentations on possible social and economic aid packages. The ANC had also called for some form of stimulus and basic income subsidy.
Rapid spread
Meanwhile, Health Minister Zweli Mkhize has deployed top medical experts, led by a specialist pathologist from the National Institute of Infectious Diseases, Dr. Kerrigan McCarthy, to help the Eastern Cape government tackle a rapid increase in Covid-19 cases in the province.
Mkhize said cultural practices at funerals are increasing the spread in the Eastern Cape. The province has the third highest number of infections, now at 345.
Mkhize said officials have pledged to the Eastern Cape government and urgently decided to deploy the team of specialists, which includes field workers, epidemiologists and experts from the World Health Organization.
‘Lift the lock‘
On Monday, 19 doctors asked Ramaphosa to end the hard blockade, arguing that there would be more damage to the country’s health system if it continues.
Dr. Saiendhra Moodley, a public health specialist at the University of Pretoria, told News24 that it was premature to judge whether the shutdown had worked.
“If nothing were done, we would already be analyzing tens of thousands of cases. Preventing that against the negative effects of the blockade … It is difficult to make that comparison when the number of cases that it has actually avoided is not known.
“My opinion is that the blockade has had a positive impact: it has prevented the widespread spread of the disease in terms of local transmission to improve capacity in health services. Therefore, the question is how long can one continue in the It was difficult blocking, but I think it was the right decision, “he said.
Other plans regarding the phasing out of the blockade will be announced Thursday, Ramaphosa said.
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