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2020 supplementary budget: The road map to the revival of the economy

29 June 2020 | Story Edward Kagiso Molefe and Dr Nico Keyser

Molefe and Kesyer_web read more — Edward Kagiso Molefe, left, and Dr Nico Keyser.

The 2020 supplementary budget comes at a time when the ongoing COVID-19 pandemic is causing widespread disruption in the world’s economy and continues to affect it negatively. Even though the precise economic and social consequences of the pandemic still remain uncertain, there is prevalent agreement between economists and policy makers that it will leave the world overwrought with the uncertainties of the future. According to the International Monetary Fund, the world economy is expected to contract sharply by 5,2% this year, due to the huge lockdown to curtail the spread of the COVID-19 pandemic. The South African economy is also expected to contract by 7,2% in 2020, and according to the Minister of Finance, Tito Mboweni, this is the largest contraction in almost 90 years. Therefore, the South African government currently finds itself in an unfortunate and restricted fiscal position. Minister Mboweni does not have much room to move within his emergency budget and therefore calls for a pragmatic approach, the reprioritisation of expenditure, and the implementation of austerity measures within the public sector and its state-owned enterprises (SOE).

Zero-based budgeting

However, the country should be applauded for responding to this economic shock with a set of unmatched measures. The Minister further highlighted that, for the first time in history, all stakeholders – including the private sector, labour, communities, and the central bank – participated in responding to the storm that came without an early warning system. This has proven the validity of the long-sung gospel that by working together, we can do more. R500 billion of government’s COVID‐19 economic support package was directed straight at the problem. Against the background of ongoing measures to address the pandemic in South Africa, the Minister’s supplementary budget of 2020 stressed several key aspects:

The first burning issue addressed in the supplementary budget was the mounting debt-to-GDP ratio, which is envisaged to reach 80,5% in this fiscal year, as compared to a projection of 65,6% in February. Although the Minister has confirmed strategies to curtail the debt and widening deficit, no sign of stabilisation was presented. South Africa continues to experience contracting revenue and is relying extensively on loans from international sources, since savings is a non-starter. The Minister has also called for zero-based budgeting as one of the strategies in building a bridge to recover, and to close the mouth of the ‘hippopotamus’, which is eating our children’s inheritance. The zero-based budgeting is a big step in the right direction; it will make all role players in government understand the economic crisis we are facing.

Prioritising infrastructure development

The other positive part of the supplementary budget was the prioritisation of infrastructure development. The South African government has already considered almost 177 infrastructure projects that will assist in boosting the economy and curtailing unemployment. The Sustainable Infrastructure Symposium, hosted by President Cyril Ramaphosa, announced 55 projects that are ready to be rolled out in due course. Government needs to further stimulate its partnership with the private sector to ensure more infrastructure development and job creation. Infrastructure development will also ensure jobs for the unskilled labour force, which makes up the largest part of our unemployment.

In terms of job creation, an economic support package of R100 billion has been set aside for a multi-year, comprehensive response to our job emergency. Moreover, the President’s job creation and protection initiative will be rolled out over the medium term. This will include a repurposed public employment programme and a Presidential Youth Employment Intervention. The country is looking forward to further details regarding this presidential initiative, particularly with regard to the Presidential Youth Employment Intervention, as the youth is the future of this country.

Despite the envisaged revenue adjustment of R1,43 trillion to R1,12 trillion, the country is expected to continue spending. An additional R21 billion is allocated for COVID‐19‐related health-care spending. The supplementary budget has also proposed a R12,6 billion allocation to front-line services. An additional R11 billion is set aside towards improved water and sanitation, and an additional R6,1 billion for youth employment ensures that the most vulnerable are supported. However, the effectiveness of this allocation in the supplementary budget is sorely dependent on the ability of our government apparatus to spend the money.

Opening the economy

The only worrying issue that the minister did not dwell on much, was the public sector wage bill, which still remains a challenge. According to the Minister, nearly half of the consolidated revenue will go towards the compensation of public service employees. The compensation of employees continues to put much pressure on service delivery and is pushing government in the direction of borrowing. On the other hand, the government of South Africa is still under pressure to implement the 2020 salary adjustments. However, the question still remains why the South African government is not considering the same process as the private sector or finding an alternative way of setting salaries at an appropriate, affordable, and fair level. This could save government money to focus on other areas that require financing, such as debt-service costs.

What remains evident and feasible is that South Africa should continue opening the economy to revive sectors hit hard by the great lockdown. Allowing trade to take place, doing business, and markets to function would provide the ultimate boost to a struggling economy. A reduced role by government could pave the way for the private sector to play a larger role in the economy. Moreover, structural reforms are required to create a favourable environment for growth and to restore South African fiscal credibility.

Opinion article by Edward Kagiso Molefe, Lecturer: Department of Economics and Finance, and Dr Nico Keyser, Head of Department: Economics and Finance

News Archive

Student leaders 2012/13 announced

2012-08-30

Ready for the task - Sabelo Khumalo, SRC President of the Qwaqwa Campus and William Clayton, SRC President of the Bloemfontein Campus.
Photo: Johan Roux
31 August 2012

The 2012/13 elections for the Student Representative Councils (SRC) of the University of the Free State were completed successfully and show meaningful support for the changes in student governance adopted by students across campuses over the past two years.

The SRC elections at the Qwaqwa Campus were completed on 23 August 2012, while the elections at our Bloemfontein Campus took place on 27 and 28 August 2012.

The SRC Elections at our Bloemfontein Campus showed a voter turnout of 4516 votes (30.8%), with the elections at the Qwaqwa Campuses showing 1753 votes (46%) – both campuses reached the required quorums and the IEA (Bloemfontein Campus) and IEC (Qwaqwa Campus) declared the elections free and fair and announced the results as a true reflection of the will of the student bodies at the campuses.

The full SRC at Bloemfontein Campus now consists of 62% black and 38% white, and 53% female and 47% male members.

In the Qwaqwa elections, SADESMO achieved 46, 38% of the vote, with SASCO, PASMA and NASMO each achieving 30,23% and 8,39% and 14,26%, respectively.

The successful elections at Bloemfontein Campus show that the detailed transformation of student governance introduced by students at the Campus in 2010 and adopted by the university in 2011, succeeded in mobilizing greater participation of students in governance and representation. These changes in the main included a shift to independent candidacy for elective portfolios (12 seats) and organizational candidacy in nine sub-councils that holds ex officio seats on the SRC. Changes also included the establishment of student representative seats in faculty governance and management forums and the adoption of a reviewed Central SRC Constitution. Ex officio seats hold full and equal constitutional authority in the SRC.

Students at Qwaqwa Campus introduced additional portfolios to its SRC, including ex-officio seats for academic affairs, arts and culture, commuter students, Rag Community Service, religious affairs, residences and sports.

A joint sitting of the Campus SRCs will establish the Central SRC 2012/13 on 9 September 2012.

As a further opportunity for participation in and the development of student governance and representation, the current Central SRC herewith also announces its recent adoption of a student governance advisory programme, namely the UFS Student Elders Council (SEC).

The SEC is established as a combined programme between the Central SRC and the Dean of Student Affairs and will consist of selected senior student leaders from all campuses who completed their terms of office, apply and are appointed to the Elders Council by the Central SRC.

The Council will serve as an advisory structure to the Central SRC and other student structures in support of the continuous development of student governance and representation of the student body at the university.

The SEC will advise the Central SRC to be constituted following the constitution of the respective Campus SRCs.

The SRC members at the Bloemfontein Campus are:

President: Mr William Clayton

Vice-President: Mr Bonolo Thebe

Secretary: Ms Karis-Robin Topkin

Treasurer: Mr Pieter Coetzee

Arts & Culture: Ms Chanmari Erasmus

Accessibility & Student Support: Ms Gene McCaskill

First-generation Students: Ms Tanya Calitz

Legal and Constitutional Affairs: Ms Nokuthula Sithole

Media, Marketing & Liaison: Ms Neo Chere

Sport: Mr Tshepo Moloi

Student Development & Environmental Affairs: Ms Thabisile Mgadi

Transformation: Ms Koketso Mofokeng

Dialogue & Ex officio: Associations Council: Mr Anesu Ruswa

Academic Affairs & Ex officio: Academic Affairs Council: Ms Nombuso Ndlovu

Residence Affairs & Ex officio: Residences Council: Mr Johann Steyn

City Residence Affairs & Ex officio: Commuter Council: Mr Michael van Niekerk

Postgraduate Affairs & Ex officio: Postgraduate Council: Mr Fadeyi Akinsuyi

International Affairs & Ex officio: International Council: Ms Tumelo Moreri

Student Media Affairs & Ex officio: Media Council: Mr Jamal-Dean Grootboom

RAG Community Service & Ex officio: RAG Fundraising Council: Mr Jaco Faul

RAG Community Service & Ex officio: RAG Community Service Council: Ms Keneue Mahloana

The SRC members at the Qwaqwa Campus are:

President General: Mr S Khumalo

Deputy President: Mr P T Lenka

Secretary General: Mr D Khethang

Treasurer General: Mr S I Sithole

Media & Publicity: Mr S N Ntombela

Politics & Transformation: Tbc

Student Development & Evironmental Affairs: Tbc Academic Affairs: Mr T Molawude

Arts & Cultural Affairs: Mr T Nkohli

Off-Campus Students: Mr B Mtshali

RAG, Community Service & Dialogue: Ms S F Mlotya

Religious Affairs: Ms D C Khau

Residence & Catering Affairs: Ms Z Mzolo

Sports Council: Mr S Mngomezulu

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