Now where's the beef, Cyril?
Cabinet meeting tomorrow will reveal whether government ready for key decisions
Tomorrow's cabinet meeting is expected to be a key test of whether the government is at last poised to make some key decisions, mapping out an economic and fiscal response to the ever-deeper crisis Covid-19 is driving SA's economy into.
The meeting comes as President Cyril Ramaphosa's administration, which has elicited high praise for its swift and decisive handling of the health crisis, is facing growing criticism for its failure to put in place a coherent plan to deal with the potentially catastrophic economic fallout of the crisis — and position the economy to revive.
A special cabinet meeting on Wednesday had been expected to come up with an economic recovery plan but ended with no decisions being made; the cabinet's five clusters were asked by the president to produce a consolidated set of priorities for an economic plan to be discussed tomorrow.
The meeting came after finance minister Tito Mboweni gave a somewhat chaotic telephonic media briefing on Tuesday at which he said he would have to table a revised budget and that the government would have to take steps to support the real economy and raise long-run growth. But he offered little that was new, promising that the cabinet would make announcements.
The sluggish pace of the government's economic and fiscal policy response is in sharp contrast to that of the Reserve Bank, which on Tuesday cut interest rates by a further 100 basis points to a record low of 4.25%, and which has rapidly intervened to bring stability to financial markets and tweak banking regulations to position banks to support customers during the crisis.
On Thursday the presidency hosted a colloquium of leading economists at which former National Treasury budget office head Michael Sachs — now adjunct professor at Wits University — called for unprecedented fiscal, financial and monetary action. He urged the government to use the public sector balance sheet to decisively reverse the massive economic shock caused by the virus, which would have particularly severe effects on poor households.
Political analyst Nic Borain said Ramaphosa's style was to consult, and the history of ideological divides in the ruling party means that nothing was simple, but while the government had taken time “we do need to hear early this week the details of a stimulus package for the economy and a support package that will get money to the very poorest households on the edge of food stress”.
Wits University economist Lumkile Mondi also cited divisions in the cabinet, saying a “war of position” had delayed decisions on an urgent economic stimulus package.
However, insiders said the government's own deep dysfunction was a particular obstacle to Ramaphosa's efforts to devise and implement a package of measures to tackle the economic and social crisis. “Government is broken,” said one senior official.
Three weeks into the lockdown, the government has yet to make a decision on proposals to increase all social grants by R500 a month temporarily, even though business, labour and community representatives at Nedlac unanimously endorsed such a move.
There has also been no decision on proposals for a credit guarantee or “funding for lending” scheme which would enable the banks to bridge companies that risk liquidation and layoffs through the crisis and help them start up again.
This is even though comprehensive plans for such a scheme, along the lines implemented by 51 other countries, were drawn up weeks ago by Intellidex chair Stuart Theobald and the Banking Association SA, and have been discussed by the banks, their regulator and the Treasury. Also on the table is a “social impact bond” that the government could use to raise funds to stimulate the economy.
There is also as yet no coherent plan or set of criteria for the gradual relaxation of the lockdown, which is now widely expected to take some months, even though Ramaphosa spoke last week of a return to operation of certain sectors under strictly controlled conditions. Business and the department of trade & industry have done extensive work on how this might be done and further discussions between business, labour and the government are expected this week on a transparent and clear set of criteria for the reopening of particular sectors, or of businesses within particular regions where the risks of transmitting the virus could be controlled.
A Nedlac meeting on Friday, chaired by Ramaphosa, was marked by agreement and collaboration between business, labour and community organisations on the need for a far-reaching social security package, as well as the need to tackle the dysfunction in the Unemployment Insurance Fund which has prevented the R40bn that is available to fund workers during the crisis through the new and improved Temporary Employee/Employer Relief Scheme reaching workers.
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