Mboweni outlines how Covid-19 R800bn relief package will be spent
Mboweni outlined the government’s combined major fiscal and monetary package to deal with the coronavirus, which has already claimed 79 lives.
”We are going all out to remove from the budget all items which can be postponed. All programmes which can be postponed are being postponed and we are redirecting money to this initiative,” he said.
He identified tourism as among the sectors whose budget would be reallocated.
”There are certain activities which, under the normal course of events, would have taken place - tourism for example. It doesn’t make sense to continue keeping the budget items for tourism in a situation where tourism is not taking place,” he said.
Mboweni assured South Africans that the R200bn national credit guarantee scheme to assist companies hard-hit by Covid-19 and with a turnover of R300 million or less, would not entirely be funded by taxpayers.
”The private sector, in conversation with the national Treasury and the SA Reserve Bank, have come to the conclusion that we can unlock between R100bn and R200bn through the national credit guarantee scheme.”
However, the profits and losses in the guarantee scheme would revert back to the National Revenue Fund.
“We have to take a positive approach and not think only about losses, but about benefits that are going to accrue to the economy.”
The additional tax relief measures would also mean more funding would be unlocked in the economy, and extra money in people’s pockets.
He addressed concerns about the government’s decision to source funding from institutions such as the International Monetary Fund (IMF) and the World Bank, saying the unease was akin to making a mountain out of a molehill, as the country was a member of both and paid its subscriptions.
He said South Africa, being in a war-like situation, was entitled to approach these institutions if there was a need, and that the IMF funding was specific to the Covid-19 crisis.