01 April 2020 - 12:10The Covid-19 virus may be the latest cause of our economic distress, but we were in recession even before it hit thanks to bad policy choices. Both short-term and longer-term considerations now argue for swift, fundamental changes to the rules of our economic game.
The immediate result will be a sudden drop in tax revenue coupled with a steep rise in the cost of borrowing. In other words, our state is going to have a lot less money than expected at a time when it needs to ramp up its spending to assist people, households and businesses to survive this passing storm.
Take SAA, for example. It should be closed immediately and the assets sold off where possible. There is no justification for spending the budgeted R16bn to keep it going when this money could rather be spent on boosting health care, or saving small businesses and jobs by paying wage bills during this time.
The government may well need to approach the IMF or World Bank for funds in the very near future, and these institutions will resist helping us if we insist on maintaining this huge patronage budget. The DA has long been calling for these reforms. They will help us get to the other side of this nightmare, and thereafter they will reduce inequality by enabling more people to be economically active. And i
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