Govt will not borrow to finance fiscal support package

© GCIS.
Finance Minister Tito Mboweni delivers his Budget speech in Parliament on 24 February 2021.

National Treasury said on Wednesday that the total cost of the fiscal relief package announced by President Cyril Ramaphosa in the aftermath of recent destruction and looting is R38.65 billion.

The entity has also confirmed that the government will not be borrowing new money to finance the package.

The finance ministry and National Treasury held a briefing to unpack the details of the measures meant to cushion workers who lost their jobs and uninsured businesses which were affected.

National Treasury said that the measures, which included the reintroduction of the R350 monthly payments to unemployed people at a cost of R27 billion would be financed by Treasury.

Treasury chief director, Edgar Dishi: “Government is sufficiently ahead of its revenue target to accommodate the R36.2 billion of those fiscal measures so long as those measures are temporary and once-off in nature, therefore the package can be accommodated without an increase in debt, in particular market-based financing.”

The other R2 billion will come from budget reprioritisation.

Finance Minister Tito Mboweni has criticised the economic damage caused by the anarchy, saying that this would have a dire effect on the entire country’s economic system.

State-owned insurer, Sasria, said that it would be able to finance claims from its clients, however, R15 billion had been set aside by Treasury to assist the entity.

The package is expected to be presented to Parliament for approval soon.

BRINGING BACK SOCIAL ASSISTANCE

Speaking on The Money Show on Radio702 on Wednesday, Mboweni said South Africa was facing a culmination of factors that have affected the economy and government had no choice but to intervene.

“In this instance, we are facing three problems; COVID-19, low economic performance and the recent riots and vandalism of property.”

Small business and those left devastated would benefit.

He said government had been able to use the tax base, explaining, “We then decided as the leadership of this country to put in place a package of measures. Principally, the packages will be financed from the National Revenue Fund and you will see on Friday that we were fortunate enough to have some better revenue outcomes.”

Mboweni said government had no choice but to bring back social assistance for those left destitute by the effects of the COVID-19 lockdown and looting spree earlier this month.

He said the Temporary Employer Relief Scheme (TERS) has been one of the top priorities when helping South Africans who had lost their jobs.

“The Department of Labour is going to reintroduce the TERS and in discussion with National Treasury, they will also find ways bridge any gap.”

And they turned to the president to ask for social assistance: “On the social relief of the distress, we have agreed that we are going to make sure that this will be reintroduced and the dates are about to be determined.”

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