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A lot of journalists getting hyped by the IMF's warnings to @TreasuryRSA. Nothing new, Its things we have known and written about for years. I guess because its said by the world's lender of last resort, who just loaned you US$4.3bn & looks set to loan you more is a big deal1/n
Covid-19 damage is huge and will still be with us. (A) A jobs blood bath in 2020 and more to be lost in 2021. 1.7mio jobs were lost in 2020 compared to peak jobs in 2019. dependence ratio of 1 worker supporting 4 people, that's 7.3mio people back into struggling for basics (2/n)
B) who lost jobs? semi skilled, low skilled and unskilled. with near certainty, all these have no job mobility, their skills or lack thereof cannot be easily transferred to another job or sector, which are also not hiring. So nowhere to go for them except the government. (3/n)
C) Income support must continue for the duration of the pandemic and lockdown regulations. Temporary Employer/employee Relief Scheme (TERS) must be extended as long as we are in a state of disaster. The end of the state of disaster must be used as the exit trigger. (4/n)
D) Income support have fiscal costs, which will need to be paid for in future. No other way around it, social benefits ultimately are paid for by those that earn income in the economy. Tax! or a reduction in the said benefits in future. (5/n)
E) How are we going to pay for these? Increase in tax. Unjustifiable in the middle of a pandemic, and for moral reasons the state has squandered public funds and cannot demand more without demonstrating a change in behavior (SAA & no accountability at local government) (6/n)
F) High tax is ok if citizens do not have to buy private security because the SAPS is there doing the safety & securing they ought to, not have to buy private health care because one goes to a public health care facility to live not contract an illness. Not the case in SA. (7/n)
G) Spending cuts. #Consolidation or #austerity. Reduction in the level of services in future. This means less teachers, less doctors, less policy, long lines at traffic departments, or simply instead of getting ambulances, we get scooters to transport the critically sick (8/n)
H) There are spending cuts that are less painful. Wastage of R50bn a year in government. That could fund the vaccine for 60mio people. Sell those SOEs that are non strategic & a burden to the fiscus. Streamline govtmnt depatmnts & executive. What do deputy ministers do? (9/n)
I) Growth is the most sustainable way to pay for any spending. Creates jobs and people fall of the state support system. Generate more tax without high tax rates, more paying tax means we all pay less. Its that simple BUT the government must enable that to happen. (10/n)
Affordable energy, data, efficient public transport including rail for goods, efficient harbors, affordable housing, etc...all these need a professional & competent public sector. The govnmnt must provide these, if not it must enable the private sector to do it. (11/n)
These are not new, we have always known and have been written about for many years. The IMF isn't saying anything we don't know, in fact, we know more than the IMF know about the South African economy. Its old problems that never get fixed for some unfathomable reason. (n/N)
