PRESIDENT Cyril Ramaphosa has hinted that the government will be pulling back
on some of its programs and “manage public spending” as a result of the
economic knock by the lockdown.
In what sounded like setting the tone for Finance Minister Tito Mboweni who
will be tabling his revised budget this week, Ramaphosa, writing in his weekly
newsletter said because of state revue losses, difficult decisions will be made
this week.
Last week, Ramaphosa in his address to the nation said, the government had lost
R300 billion rand on tax collection because of the lockdown.
In his newsletter on Monday morning, Ramaphosa said public spending will have
to be managed and other projects withdrawn where necessary. He added the
economic hardship that befell the private sector will be forced on a number of
entities in the public sector as well.
“The government, business, labour and civil society will have to deepen their
collaboration as never before in driving the national recovery effort. Revenue
has plummeted and difficult decisions will be made in the coming weeks and
months as we seek to reprioritise our programmes, manage public spending and
scale back on projects where necessary,” he said.
Ramaphosa called for a balancing act as companies would be cutting losses in
the face economic impact of the lockdown.
Ramaphosa said South Africa like every country that enforced the lockdown to
curb the spread of the deadly coronavirus was faced with tough and difficult
decisions to be made.
He acknowledged that a job bloodbath was looming and as recent as last week
many companies have announced plans to retrench workers. This was on the back
of unemployment crisis and weak economic growth before the lockdown.
“From aviation to construction, from entertainment and leisure to hospitality,
companies have indicated their intention to retrench staff because of heavy
losses incurred over the past three months. In other cases, businesses are
closing permanently. Small businesses whose turnover has been wiped out will be
even harder hi
“We would urge that the difficult decisions to be taken are taken with care and
with due regard to balancing the sustainability of companies and the
livelihoods of workers. It is important that whatever is done is underpinned by
ensuring a just transition to all concerned,” he said in the newsletter.
Ramaphosa said the government will continue to dish out financial relief in the
form of loans, tax relief, debt restructuring, extended credit lines and retail
rental exemptions to protect local businesses.
Temporary social assistance to poor households was gathering pace and providing
vital relief, he said, however, these measures could only go so far.
“As more economic activity resumes, struggling businesses will be ‘playing
catch-up’ to recoup lost productivity and revenue for some time to come. As
much as we seek to protect current jobs, we also need to create new ones, and
attract new, greater levels of investment. It is imperative that we open
avenues for self-employment and entrepreneurship, especially for young people,”
he said.
The president said in the past two years the business community had made
commitments to invest in various businesses in our country. He hoped that the
business community and international investors will honour the investment
commitments made in a number of forums such as the South Africa Investment
Conference.
“Coronavirus has resulted in companies around the world re-evaluating their
investment and expansion plans,
and we must anticipate that some of these commitments may be scaled back and
even cancelled. South Africa still has great investment opportunities and
assets to invest in.
“ We remain optimistic that as we gradually return to normalcy, and as we forge ahead with the economic reform measures embarked upon earlier this year, that the growing investment levels we were seeing before coronavirus hit will slowly but surely return,” he said.
