Presidents economic recovery plan – a small carrot and a big stick

 Presidents economic recovery plan – a small carrot and a big stick 

AIDC Statement | 16 October 2020

The President’s economic reconstruction and recovery plan will not lead to reconstruction or recovery. Instead, it will lead to even greater social unrest and economic depression. At the same time as President Ramaphosa announced his pipedream, the Treasury is gearing toward the Medium-Term Budget Statement (MTBPS), set to be tabled on the 28 October. The MTBPS is at the heart of the matter. The President himself acknowledges this, where he points out that the MTBPS’ “framework will provide a path for fiscal consolidation, debt reduction and reprioritisation” foregrounding further cuts.

These possible cuts will be over and above the:

• February 2020 cuts to the public sector wage bill by more than R160bn (over the next three years).
• Supplementary Budget cuts amounting to “R230bn in 2021/22 and 2022/23, to be followed by further reductions in 2023/24”. 

This results in a nominal cut of 4% or more than 7% in real terms from non-interest expenditure. In this way, the President’s plan for the public employment of “more than 800 000 work opportunities” is completely undermined by the Treasury’s budget plans. The state is meant to lead this job creation programme in conjunction with a massive infrastructure programme, yet is being further incapacitated and undermined by Treasury’s commitment to irrational austerity. 

In this context the extension of the Covid-19 grant by 3 months, is a small carrot compared to the club which the Treasury is using to beat the public sectors workers and the public sector into submission. Productivity and service delivery will deteriorate, the vast majority of people in South Africa will suffer. 

The neoliberal agenda does not end there. It is accompanied with governments commitment to the unbundling of Eskom and the increased privatisation of electricity. This will inevitably continue to exclude the majority from being provided with decent services. So much for inclusive growth.

If anything, the pandemic has shown that we need more spending not less. The public sector needs to be strengthened and expanded. Indeed, a March 2020 report from Department of Health indicated that an additional 180 000 doctors, nurses and community health workers are needed by 2025. Similarly, in order to address both the ecological crisis and mass unemployment we need the roll out of a state-led renewable energy programme. 

All this requires a break from the current macroeconomic framework, which government is unwavering in its commitment to.  It is only through movements and organisations that we will be able resist against the deepening austerity agenda. Beyond resistance together we need to work towards the development of a new charter which is green and which red. Red to symbolise the redistribution of wealth and income from rich to poor. Green in opposition to an investment programme that is committed to a fossil fuel economy. 

For further information contact

Dick Forslund 0828957947

Dominic Brown 0813094973