South Africa’s National Treasury will fork out about R6 billion to extend a special relief grant for three more months.
The money will be found in the budgets of other government programs by reprioritising spending and not by increasing overall state expenditure, Finance Minister Tito Mboweni said Friday by phone.
President Cyril Ramaphosa announced on Thursday that the grant would be extended when he presented an economic recovery plan to lawmakers. That’s after Mboweni had previously said that the country could not afford to permanently pay the special allowance of R350 a month that was announced in April as part of a R500 billion Covid-19 relief package.
“The president has decided to extend for three months and the job of the National Treasury is to adjust budgets and make sure that the decision by the president is achieved,” Mboweni said. The exact details are still being finalised and the minister said he stands firmly behind “maintaining the fiscal framework.”
Mboweni will present the medium-term budget policy statement on October 28 after asking parliament to delay it by a week so the Treasury can assess the implications of the government’s economic recovery plan on spending. A supplementary budget in June showed the fiscal deficit could be more than 15% of gross domestic product this year and gross debt would peak at 87.4% of GDP in four years if the government takes active steps to manage its finances.
Since the June budget, tax collection numbers have shown big shortfalls and data from the statistics office revealed the economy contracted even more than forecast in the three months through June.
Labour and civil society groups had called for the special grant to be continued beyond this month after the country shed 2.2 million jobs in the second quarter during to a national lockdown.