On Friday January 21, the World Bank approved an 11.3 billion rand ($750 million) development policy loan for South Africa, with questions now being raised over how the extra money could be used.
“The World Bank loan, which has a 13-year repayment period with a three-year grace period, will help finance ongoing spending on critical health and social protection programs,” the Office of Economic Research (BER) in a press release. research note on Monday (January 24).
“Therefore, some of the funds can be used to help pay for the inevitable extension of the Social Distress Relief (SRD) grant beyond March 2022. At least that is the impression of the Treasury statement. on the loan.”
However, the Treasury’s deputy director general for asset and liability management, Duncan Pieterse, said the proceeds would be used to cover interest payments on South Africa’s external debt and for the repayment of foreign debt.
“It is important to note that while the announcement is welcome, this should not be considered ‘new’ financing as it was already part of the foreign loans included in the fiscal framework outlined in the Medium Fiscal Policy Statement. term (MTBPS) of November 2021,” the BER said. noted.
Calls for extension
The ruling ANC and the country’s largest business federation, Cosatu, have called for an extension of the R350 social relief grant introduced in response to the Covid-19 pandemic.
“The R350 Covid SRD grant has had a significant positive impact on the lives of the poor, but more particularly the unemployed,” President Cyril Ramaphosa said in a statement Sunday, January 23. “The government needs to consider the feasibility and affordability of providing some form of income support to the poor and unemployed.”
The South African Trades Union Congress said the grant should be extended and form the basis of a new Basic Income Grant (BIG).
“We need to extend the R350 SRD subsidy beyond March, increase it to the food poverty line and use it as the basis for a BIG. We need to come to the aid of battered sectors of the economy. Banks must commit to providing affordable business loans,” he said.
“These aid measures must be encouraged to support the maintenance and creation of jobs. We must mobilize all stimuli for the economy, including the finalization of Regulation 28 of the Pensions Act.
Social Development Minister Lindiwe Zulu said a new basic income allowance in South Africa will likely be implemented over several years, with its department currently pushing for an extension of the R350 Social Relief of Distress (SRD) grant as a baseline.
“Depending on the costs and budgetary situation of the country, the gradual implementation may take a few years. Until then, however, the department is currently motivating the extension of the special SRD Covid-19 grant, preferably over the medium-term period,” she said.
“This should provide much-needed income support to cushion the economic hardship occasioned by the onset of the Covid-19 pandemic for 18-59 year olds.”
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