South Africa to pay 6 billion rand to extend COVID-19 relief grants

The South African National Treasury will disburse some 6 billion rand ($ 363 million) to extend a special aid grant for a further three months.

The money will be found in the budgets of other government programs by changing spending priorities rather than by increasing overall state spending, Finance Minister Tito Mboweni said by phone on Friday.

President Cyril Ramaphosa announced Thursday that the grant will be extended when he presents an economic recovery plan to lawmakers. That’s after Mboweni had previously said that the country could not permanently afford to pay the special allowance of 350 rand a month that was announced in April as part of a 500 billion rand Covid-19 aid package.

“The president has decided to extend for three months and the job of the National Treasury is to adjust budgets and make sure the president’s decision is carried out,” Mboweni said. The exact details are still being finalized and the minister said he strongly supports “maintaining the fiscal framework.”

Mboweni will present the medium-term budget policy statement on October 28 after asking parliament to delay it a week so the Treasury can assess the spending implications of the government’s economic recovery plan. A supplemental budget in June showed that the fiscal deficit could be more than 15% of gross domestic product this year and gross debt would peak at 87.4% of GDP in four years if the government takes active steps to manage its finances.

Since the June budget, tax collection figures have shown large deficits and data from the statistics office revealed that the economy contracted even more than expected in the three months to June.

Labor and civil society groups had called for the special grant to continue beyond this month after the country lost 2.2 million jobs in the second quarter during the national shutdown.

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