Divert funds from SOEs to fight coronavirus, proposes business

stock photo
stock photo

One of the proposals put forward by business to government as part of measures aimed at mitigating the impact of the coronavirus pandemic on the economy is to redirect funding from non-essential state-owned enterprises to a Covid-19 Fund.

This was brought up on Monday during a meeting called by Nedlac (the National Economic Development and Labour Council) between government, labour and social partners. Private sector representative Stavros Nicolaou said business has fully grasped the magnitude of Covid-19 on the economy.

Nicolaou, a senior executive at Aspen, urged the government to set up a "Covid Fund", as some other economies around the world have done  in order to lessen the impact of the deadly virus on the economy.

"We need to set up a Covid fund, and one of the places to find funding is to redirect funding from non-essential state-owned entities,” said Nicolaou.

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“We need to mitigate the impact on the economy to ensure that we have a quick recovery once we've brought the contagion under control." Nicolaou stressed that this was "an exploratory suggestion" which has not yet been fully discussed with government.

"We are not saying shut down the funding of SOEs, we are proposing that government redirects funds," he added.

The meeting came after President Cyril Ramaphosa on Sunday declared a national state of disaster to try to contain the coronavirus outbreak.

The country's struggling state-owned entities rely on government for funding, and loans backed by the state.

Other proposals put forward by business in the meeting included tax and loan relief for small and medium entreprises (SMMEs).

Speaking to journalists, Minister of Trade and Industry Ebrahim Patel said National Treasury would continually monitor the impact of the virus on the economy, indicating that support would be offered to companies in distress. The global impact of the virus has already been felt by the local stock market, with the JSE All-share index last week recording one of its worst performances in recent years.

After a wild trading day on Monday, which at one stage saw the JSE's all share index lose more than 12% of its value, many of South Africa's biggest companies lost billions in value.

South Africa currently has 61 cases of coronavirus infections, and no reported deaths.

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