What South Africans can expect in the post-pandemic economy
The effects of Covid-19 have been wide-reaching and felt by all South Africans. The impact of the lockdown has placed restrictions on our ability to socialise, work and move freely, among other things. This has changed life as we know it on multiple levels.
Government has responded in a strong, decisive manner underpinned by its number one strategy: to save lives. This response, initially received with almost unanimous praise, has become increasingly criticised by the public as the knock-on effects of lockdown become apparent.
A R500 billion recovery package has been tabled and presented by President Cyril Ramaphosa as a means to alleviate the deepest of hardships caused by locking down the economy. In isolation these decisions may appear to be suitable under the circumstances, however, the collective view strikes directly at the core of the problem:
How to respond to unlimited needs with limited resources?
The R500 billion in unbudgeted expenditure must be financed somehow. The economy is expected to contract by approximately 6%, and tax revenues are expected to be lower. The budget deficit was already expected to be 6.8% in 2020 according to February’s budget speech. Currently, the International Monetary Fund (IMF) sees this figure increasing to 13.3% for 2020. This would be South Africa’s largest budget deficit ever. The current record budget deficit in South Africa is 11.6% in 1914.
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