Did you know that on 21 April 2020 the President announced an economic recovery plan and several new relief measures in order to assist South African businesses in the wake of the COVID-19 pandemic and nationwide lockdown?
In our previous advisory communications we have discussed the various tax and debt relief measures that have been made available by the government, as well as financial assistance contributed by the private sector, aimed at aiding South African businesses that are struggling financially as a result of the COVID-19 pandemic, the nationwide lockdown and the reigning economic recession.
On 21 April 2020 President Cyril Ramaphosa addressed the nation and discussed the COVID-19 economic recovery plan for South Africa, which includes various additional, new and amended measures for and avenues of relief for businesses. This recovery plan consists of three phases:
The first phase commenced when the COVID-19 pandemic was declared as a national disaster in March 2020. This phase saw the introduction of various tax relief measures, wage assistance via a special UIF programme, the availability of disaster relief funds, and funding to small and medium sized businesses (“SME”). These aspects have been independently considered in our previous communications.
The second phase commenced on 21 April 2020 with the President’s address. This phase of the plan is aimed at stabilizing the economy, and involves the introduction of a social relief and economic support package of R500 billion, which amounts to around 10% of the country’s GDP.
The following considerations may be highlighted to summarize the key aspects that businesses should take note of and which may offer relief:
It may be noted that various health and social relief measures (such as grants and funding to assist the poor and needy) also form part of the relief package introduced for this phase.
The third phase of the economic relief plan will involve the implementation of various measures to drive the recovery of the South African economy, as the country emerges from the COVID-19 pandemic. Further details of this phase will be made available to the public in due course.
The way forward
To date, government has approached the World Bank, International Monetary Fund, BRICS New Development Bank and the African Development Bank for assistance and these institutions are working with the National Treasury on various funding transactions. Some of these institutions have created financing packages that are aimed at assisting countries that are having to address the coronavirus crisis, such as South Africa. Further relief and funding options may therefore be on the horizon.
Further details regarding phase 2 and its measures should become clearer and more certain over the next week or two.
For the moment and at the time of publication, this is the information we have obtained. We will keep you updated should any further relevant information come to our attention.
Although we have used our best efforts to ensure that all information contained in this communication is accurate as at the date hereof, we cannot guarantee the accuracy thereof and recommend verification thereof before use.
This client information series is brought to you by the Siyandisa Trust in conjunction with PH Consult, a strategic partner of the Siyandisa Trust.
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