THE BIG STIMULUS: How SA can fund it, and how to spend it
The optimal funding solution is a combination of short-term external funding and a great deal of self-help
President Cyril Ramaphosa did a stellar job shutting down SA. As difficult as that was, the really hard work starts now. So how does he make sure the bulk of the economy is operational when the lockdown ends?
Unlike many other countries in the world, SA has announced limited fiscal stimulus. The problem is that after 10 years of Jacob Zuma’s mismanagement and corruption, the country has little room to increase spending in this crisis. This is in stark contrast to SA’s ability to respond to the global financial crisis in 2009, when the benefits of having built up fiscal space could be clearly seen. The long-forgotten February 2020 budget forecast a main budget deficit of 6.8% of GDP, before any Covid-19 response was envisaged...