Emergency Budget relief for economy
Mboweni yesterday indicated that he would table the emergency Budget on June 24, hours before President Cyril Ramaphosa eases the country’s Covid-19 lockdown regulations to Level 3, allowing for increased economic activity while putting measures in place to contain the pandemic.
The concerted efforts are likely to see more businesses opened for trading after massive pressure on the government to find ways to mitigate the economic fallout from the pandemic, as businesses push for the full reopening of the economy before its complete collapse.
The National Treasury yesterday said Mboweni would table the Budget to ratify the government’s plans for a R500billion stimulus package.
The economic response package will be partly funded through R130bn reprioritised within existing baselines, constituting of 12.1percent of the consolidated non-interest, non-compensation Budget.
The proposed Special Adjustment Budget would modify the February Budget to divert current baseline allocations from departments to enable spending on the Covid-19 response.
The Treasury said the departments were required to identify programmes or activities that could be temporarily suspended without negatively impacting their longevity. These would typically be programmes that have already been put on hold during the lockdown and spending activities that are not critical to core service delivery.
“A revised fiscal framework will also be presented to account for substantial revenue losses emanating from the economic shock of the pandemic, and subsequent lockdown,” the Treasury said. “All other adjustments not included in this Special Adjustment Budget will be tabled in the October Adjustment Budget.”
The Treasury said government departments would be allowed to make final submissions to the Budget data workbook on June 15, following meetings to formulate recommendations to technical and political committees and obtaining Cabinet approval.
It said the government had adopted aggressive fiscal measures to keep the economy afloat, including a credit guarantee scheme, financial support for SMEs and informal business, tax deferrals, wage protection, and support to municipalities.
The myriad new measures yesterday saw the SA Reserve Bank (SARB) also relaxing the prudential policy, regulatory and supervisory measures for co-operative financial institutions (CFIs) and co-operative banks to avoid mass insolvencies due to Covid-19.
SARB said the easing was meant to provide Covid-19 impact relief measures on the financial sector, following a liquidity injection and interest rates cuts. It said there were 13 deposit-taking CFIs and co-op banks registered with SARB’s Prudential Authority (PA), holding a collective value of deposits of just more than R25million.
SARB said it recognised the impact Covid-19 will have on the financial soundness of CFIs and co-op banks as the economy weakened.
Some of key dates ahead of tabling of special adjustment budget:
13 May - Guidelines sent to departments;
22 May - Departments to submit their proposed adjustments;
2-8 June - National Treasury special adjustment budget approval processes;
10/11 June -- Cabinet approval;
12 June - Allocation letters to departments;
15 June - Final submission date for special adjustment budget data workbook; and
24 June - Tabling of the special adjustment budget.