https://www.polity.org.za
Deepening Democracy through Access to Information
Home / Opinion / Real Economy RSS ← Back
Close

Email this article

separate emails by commas, maximum limit of 4 addresses

Verification Image. Please refresh the page if you cannot see this image.

Sponsored by

Close

Article Enquiry

New ways of thinking and acting

Verification Image. Please refresh the page if you cannot see this image.
Close

Embed Video

New ways of thinking and acting

27th March 2020

By: Terence Creamer
Creamer Media Editor

ARTICLE ENQUIRY      SAVE THIS ARTICLE      EMAIL THIS ARTICLE

Font size: -+

Planning, coordination and cooperation have to become our watchwords as we seek to respond to the Covid-19 health emergency and its economic impacts. Acting decisively is vitally important, but so is acting in unison and with purpose as far as feasibly possible.

More than ever before, health, education, labour, social security, fiscal, monetary, energy, trade and industrial policies have to be joined up and coordinated with the actions of private enterprise and nongovernmental organisations.

Advertisement

Given the nature and scale of the emergency, the health response has to be at the heart of any comprehensive effort, with priority given to detection and testing, containment and treatment.

Fiscal resources have to be found, and found fast, to enable the health authorities and practitioners to do their work as effectively and safely as possible. Immediate consideration has to be given, therefore, to shifting budgets away from other government programmes to help efforts aimed at “flattening the curve”, so that those who become gravely ill as a result of a Covid-19 infection do not overwhelm our healthcare system.

Advertisement

South Africa will probably have to make the drastic decision of abandoning the fiscal-consolidation pathway partly outlined in the 2020 Budget. But it should still explore fiscally prudent responses, such as fully leveraging the country’s world-class private healthcare resources, to spread the financial burden.

In the end, however, there will be no getting away from some form of large-scale fiscal response or stimulus, particularly given that a monetary response can only have a limited impact at a time when production systems are not being utilised and investments are being delayed or deferred.

That’s not to say lowering interest rates doesn’t help; it does. Therefore, the South African Reserve Bank did the right thing last week when it lowered the repo rate by 100 basis points to 5.25%.

Nevertheless, a fiscal policy response will be far more impactful, particularly where transmission mechanisms are already in place to support vulnerable citizens, sustain small businesses and encourage spending.

The policy response has to go beyond monetary, fiscal and health policy, though, if we are to limit the economic impacts of Covid-19 and ensure that the now inevitable 2020 recession does not trigger a depression.

Any stimulus package should also seek to accelerate ready-baked economic opportunities such as the procurement of much-needed new power generation capacity, which could help galvanise domestic construction and manufacturing activity early in 2021.

In addition, we should already be thinking about extending the working year well into the holiday period of December and January, largely to facilitate educational progression, but also to claw back time and money lost.

 

EMAIL THIS ARTICLE      SAVE THIS ARTICLE ARTICLE ENQUIRY

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here

Comment Guidelines

About

Polity.org.za is a product of Creamer Media.
www.creamermedia.co.za

Other Creamer Media Products include:
Engineering News
Mining Weekly
Research Channel Africa

Read more

Subscriptions

We offer a variety of subscriptions to our Magazine, Website, PDF Reports and our photo library.

Subscriptions are available via the Creamer Media Store.

View store

Advertise

Advertising on Polity.org.za is an effective way to build and consolidate a company's profile among clients and prospective clients. Email advertising@creamermedia.co.za

View options
Free daily email newsletter Register Now