President Ramaphosa addressed the nation tonight on the COVID-19 economic measures.
The President said that more than 126,000 tests have been conducted and that there are currently 3,465 confirmed cases of coronavirus. He also added that more than 2 million people have been screened in communities across the country and over 15,000 have been referred for testing.
The President said that the economic response can be divided into three phases:
“The first phase began in mid-March when we declared the coronavirus pandemic as a national disaster. This included a broad range of measures to mitigate the worst effects of the pandemic on businesses, on communities and on individuals. The measures included tax relief, the release of disaster relief funds, emergency procurement, wage support through the UIF and funding to small businesses.”
He continued: “We are now embarking on the second phase of our economic response to stabilise the economy, address the extreme decline in supply and demand and protect jobs. As part of this phase, we are announcing this evening a massive social relief and economic support package of R500 billion, which amounts to around 10% of GDP.”
“The third phase is the economic strategy we will implement to drive the recovery of our economy as the country emerges from this pandemic.
Central to the economic recovery strategy will be the measures we will embark upon to stimulate demand and supply through interventions such as a substantial infrastructure build programme, the speedy implementation of economic reforms, the transformation of our economy and embarking on all other steps that will ignite inclusive economic growth,” said President Ramaphosa.
The President has been in meetings with business, labour and the community constituency in NEDLAC, Premiers, MECs and Metro Mayors and with the members of the Presidential Economic Advisory Council.
After meeting with these stakeholders, the Cabinet had to consider various proposals and also finalised the social relief and economic support package.
This package includes the following:
- Firstly, an extraordinary health budget to respond to coronavirus
- Secondly, the relief of hunger and social distress
- Thirdly, support for companies and workers and
- Fourthly, the phased re-opening of the economy.
“The impact of the coronavirus requires an extraordinary coronavirus budget – of around R500 billion – to direct resources towards fighting the pandemic. This will include the reprioritisation of around R130 billion within the current budget,” the President continued, “The rest of the funds will be raised from both local sources, such as the Unemployment Insurance Fund and from global partners and international finance institutions. To date, the World Bank, International Monetary Fund, BRICS New Development Bank and the African Development Bank have been approached and are working with the National Treasury on various funding transactions.”
President Ramaphosa said that this funding will be used to fund the health response to the coronavirus.
An additional R20 billion will also be made available to municipalities for the provision of emergency water supply, increased sanitisation of public transport and facilities and providing food and shelter for the homeless. This is because the nationwide lockdown has had a negative effect on revenue of municipalities.
A temporary 6-month Coronavirus grant has been established to assist the most vulnerable families in the country. R 50 billion has been allocated towards the relief of those who are most affected by the coronavirus.
In other words, child support grant beneficiaries receive an extra R300 in May and an additional R500 from June to October. All grant beneficiaries will receive an extra R250 for the next 6 months.
“In addition, a special Covid-19 Social Relief of Distress grant of R350 a month for the next 6 months will be paid to individuals who are currently unemployed and do not receive any other form of social grant or UIF payment. The Department of Social Development will issue the requirements needed to access and apply for this funding,” the President announced.
The President also touched on the food parcel shortage the those in need and said: “…the Department of Social Development has partnered with the Solidarity Fund, NGOs and community-based organisations to distribute 250,000 food parcels across the country over the next two weeks.”
R100 billion will also be set aside to create jobs and protect employees’ jobs.
The president continued:
- UIF’s special COVID-19 benefit has paid out R1.6-billion, assisting over 37,000 companies and 600,00 workers.
- R40 billion has been set aside for income support payments for workers whose employers are not able to pay their wages.
- We continue to provide assistance – in the form of loans, grants and debt restructuring – to SMMEs, spaza shop owners and other informal businesses.
- The value of this assistance to date is over R100 million.
- An additional amount of R2 billion will be made available to assist SMEs and spaza shop owners and other small businesses.
- The IDC facility to support companies to procure or manufacture personal protective equipment has been utilised in the past few weeks, with finance of R162 million approved to date.
With regards to the initial tax relief measures, the President announced the following:
- In addition to existing tax relief measures, we will also be introducing a 4-month holiday for companies’ skills development levy contributions, fast-tracking VAT refunds and a 3-month delay for filing and first payment of carbon tax.
- To assist a greater number of businesses, the previous turnover threshold for tax deferrals is being increased to R100 million a year and the proportion of PAYE payment that can be deferred will be increased to 35 percent.
- Businesses with a turnover of more than R100 million a year can apply directly to SARS on a case-by-case basis for deferrals of their tax payments.
- No penalties for late payments will be applicable if they can show they have been materially negatively impacted in this period.
- Taxpayers who donate to the Solidarity Fund will be able to claim up to an additional 10 percent as a deduction from their taxable income.
- In total these tax measures should provide at least R70 billion in cash flow relief or direct payments to businesses and individuals.
President Ramaphosa will address the nation again on Thursday.