SA President Cyril Ramaphosa announced that he would host an investment summit later this year. Photo: Phando Jikelo/African News Agency (ANA)

CAPE TOWN - The DA has called for answers on how the government planned to finance the R102 billion needed for President Cyril Ramaphosa's stimulus package. 

In a statement, the DA said that the estimated R102 billion needed for Ramaphosa’s proposed R43 billion stimulus package and R59 billion bailout package for state-owned entities (SOEs) begged the question of how this would be financed. 

This on top of the public-sector wage bill, now estimated to be R30 billion more than budgeted for in the main budget over the medium term, according to the DA.

On Sunday it was reported in an online business daily that the stimulus package announced two weeks ago by Ramaphosa would cost South Africa about R43 billion. 

The package was expected to help uplift or stimulate the economy that was reportedly near a recession and would form the basis of Finance Minister Nhlanhla Nene’s medium-term budget policy statement, according to the report. 

The DA said that this amount pointed to the erosion of credibility of the National Budget and the fiscal framework, a notion recently highlighted by the International Monetary Fund. 

The R100 stimulus package will form on the basis of "existing budgetary resources and the pursuit of new investments while remaining committed to fiscal prudence". Ramaphosa said when he announced the stimulus package. 

Negative growth

Statistics South Africa, in a report released in early June, predicted negative growth for the second quarter, which might throw the country into another recession.

In June last year, StatsSA announced that South Africa was in a technical recession for the first time since 2009. This was after the country’s economy contracted by 0.7 percent in the first quarter of 2017 after shrinking by 0.3 percent in the fourth quarter of 2016. 

Efficient Group economist Dawie Roodt said whatever the results of the quarter would be, “the fact is that the country has always been in a recession because people are getting poorer and poorer”.

Summit investment

In April, Ramaphosa announced that he would host an investment summit later this year, which he aimed to use in his bid to raise R1.2 trillion over the next five years.