While National Treasury cannot yet comment on Moody's rating decision, expected this week, Director General Dondo Mogajane says that for now, Treasury is still acting within its means in addressing the impact of the Covid-19 outbreak.
Mogajane was on Tuesday speaking at a briefing in Pretoria, along with economic cluster ministers. They provided details on the action plans of their respective departments, in response to the Covid-19 crisis.
On Monday, President Cyril Ramaphosa announced that a 21-day lockdown would be enforced from Thursday at midnight, to arrest the spread of infections, which now totals 554.
The president also announced the establishment of a Solidarity Fund to support the most vulnerable South Africans. The State has provided R150 million in seed capital, of which R100 million comes from National Treasury and R50 million from the National Lottery. South Africans are also invited to make contributions to the fund.
Tax subsidies will be introduced and financial support to small businesses is being provided by various departments.
Responding to a question on how the response to coronavirus outbreak might affect the National Budget, tabled in February, Mogajane said it might not be necessary to retable the Budget. "We will explore amending the appropriations bill. But in the meantime we will allow virements where possible. This can be considered for initial response to coronavirus," he said.
'We have to use what is possible'
Virements allow for the shifting of unspent funds appropriated for one programme to another programme within the same department, according to Treasury.
"For now National Treasury is working within its means, and depending on impact of virus different options will be considered," Mogajane said. Government is working to limit the fiscal deficit by considering reprioritisation of spending and the postponement of certain initiatives.
Mogajane stressed that additional action is needed to lift economic growth in the medium to long term. South Africa entered into a recession as the economy contracted for two consecutive quarters in the latter part of 2019. Mogajane said fiscal policy alone can't address the increasing pressures South Africa is facing and Treasury is working on proposals on how to deal with funding pressures created by the pandemic.
Mogajane said that Treasury is assessing the macro-economic impact of the outbreak and related factors, such as the volatile oil price and load shedding which would inform the fiscal framework. The medium-term budget policy statement could also provide an opportunity to retable the budget and fiscal framework. "Currently we have to use what is possible in terms of reprioritisation processes to address the challenges," he said.
Last week Treasury issued an instruction note to municipalities and their entities to speed up the procurement of goods that would help prevent and contain the spread of the coronavirus, Fin24 reported.