The National Treasury said the special Covid-19 social relief of distress grant was allocated R2.1 billion to extend it until the end of April. Photograph: Phando Jikelo/African News Agency(ANA)
The National Treasury said the special Covid-19 social relief of distress grant was allocated R2.1 billion to extend it until the end of April. Photograph: Phando Jikelo/African News Agency(ANA)

Budget 2021: Social grants value to increase less than inflation

By Dineo Faku Time of article published Feb 25, 2021

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PRETORIA - THE MEDIUM-Term Expenditure Framework has lowered social grants by 2.2 percent.

The National Treasury said the special Covid-19 social relief of distress grant was allocated R2.1 billion to extend it until the end of April.

“Total social grants are reduced by R5.8bn in 2021/22, R10.7bn in 2022/23 and R19.5bn in 2023/24. All grant values will increase by less than inflation,” the Treasury said.

The number of beneficiaries was expected to increase by about 300 000 people over the period.

The Treasury said since the 2020 Medium-Term Budget Policy Statement there had been three-month extensions of the special Covid-19 social relief of distress grant and the Unemployment Insurance Fund’s Temporary Employer/Employee Relief Scheme (Ters), and funding for the public employment initiative and for provincial hospitals in 2021/22.

Following the outbreak of the Covid-19 pandemic, companies could choose to benefit from either Ters or the expanded employment tax incentive, and claimed R57.3bn from the Ters against only R1.4bn from the employment tax incentive.

By mid-February 2021, of the total R70bn in estimated tax relief from the Covid-19 measures, R40bn had been taken up. In terms of support for small businesses, the National Treasury, in partnership with the Reserve Bank and the Banking Association South Africa, launched the Covid-19 loan guarantee scheme in May last year, and revised it in July.

This arrangement was designed to enable commercial banks to support firms until economic activity could resume. The Treasury guaranteed support of up to R100bn later increased to R200bn for this scheme.

“To date, banks have provided R17.8bn in relief to 13 173 approved beneficiaries. The arrangement is being expanded through non-bank financial institutions to reach a greater number of distressed firms, but the final outlay is expected to remain well below the guaranteed amount.

“At the height of the pandemic, banks provided R617bn in restructuring of credit exposure following guidance from the Prudential Authority. A portion of this was provided to small businesses,” the Treasury said.

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