The United Democratic Movement (UDM) has listened with interest to the details that Finance Minister Tito Mboweni announced as part of South Africa’s response to the economic havoc the Coronavirus has wrought. He appears to have clarity of thought with regards to the economic policy interventions required, but the proof will be in the pudding where execution is concerned.
The UDM is pleased to hear that the South Africa Reserve Bank (SARB) has been tasked to play a more central role in the R200 billion loan guarantee scheme. This is in line with our view that the SARB has a critical role to play in providing facilities to commercial banks in order for them to use such facilities for targeted sectors of the economy, such as small and medium enterprises, as part of a broader “Coronavirus Pandemic Response Programme”.
We however reiterate our view that there still is scope for an expansionary monetary policy and that the central bank should further reduce the interest rate to provide South Africans with much needed relief.
We had earlier suggested that insurers be brought on board, and we therefore welcome Minister Mboweni’s announcement that insurance companies will have to put in place a set of measures so that policy holders are not penalised for missing premium payments.
It is however a pity that Minister Mboweni did not consider our suggestion, of a three-month moratorium on bond, car and other loan payments, which the UDM made earlier this week. We still feel that banks are in too much of a position of power as they have the discretion to say no to desperate loan holders who are struggling to meet their payments due to the economic impact of the Coronavirus lockdown.
Another aspect the UDM believes should be considered is the fact that South Africans are going to experience serious cash-flow problems and it would be good if, for three months, no debit orders are reversed due to insufficient funds. A stay on bank account closures, due to bad bank account conduct, as well as bank fees would give our people a reprieve.
In light of the fact that government will be reprioritising R130 billion within the current budget it is common cause that the minister will have to table a revised budget and we look forward to that.
Mr Bantu Holomisa