22 April 2020
The South African Communist Party welcomes the generally pro-poor and pro-worker measures announced by President Cyril Ramaphosa on Tuesday night, 21 April 2020, as part of a package to fight the war against the novel coronavirus (Covid-19) pandemic.
The President announced a social relief and economic support package amounting to R500 billion, about 10 per cent of our gross domestic product. The package will cover an extraordinary health budget to respond to Covid-19, the relief of hunger and social distress and support for workers. The package includes a temporary, six months Covid-19 Grant, directing R50 billion towards relieving the plight of those who are most desperately affected by the pandemic. In this regard, the child support grant will be increased by R300 in May and, from June to October, an additional R500 each month, while all other grant beneficiaries will receive an extra R250 per month for the next six months. ‘In addition, a special Covid-19 Social Relief of Distress grant of R350 a month for the next 6 months will be paid to individuals who are now unemployed and do not receive any other form of social grant or UIF payment’, said the President.
In welcoming the broad thrust of the President’s announcement, we will remain vigilant around much of the detail. For instance, not all of the R500 billion is new spend – R130 billion will come from reprioritising the budget. While budgetary reprioritisation is certainly a major requirement in the midst of the current crisis, it is unclear at this point what currently budgeted programmes will be affected.
In particular, we cannot go back to the crisis before the crisis – that is our stance as the SACP.
In order to turn our economy around, we need a massive investment in public infrastructure, a stronger role for and capacity in the state, in part through well managed and thriving state-owned enterprises, and state intervention in the economy on behalf of the people as a whole, the majority of whom are the working class and poor.
The outbreak of Covid-19 and global responses to it underline the important role of the state in leading development and serving the people.
Domestic mobilisation of funds
The SACP reiterates its call for a thoroughgoing mobilisation of investment from domestic sources of funds both in order to win the war against Covid-19 and turn our economy around. In the spirit of the principle ‘Whatever it takes’ that the President has endorsed, all existing policy instruments should be re-examined and strengthened, and new ones developed. Missing from the President’s announcement is any indication of a determination for strict regulation of cross border capital flows, that is, tight management of the capital account. Mobilising domestic funds should be co-ordinated in a way that will be balanced, sustainable and mutually beneficial to both the funds and the national imperative of the absolute necessity to win the war against Covid-19 and turn our economy around in the interest of all the people.
International financial institutions
Correctly, and both publicly and internally in the Alliance consultative process, the SACP placed emphasis on the protection of our hard-won democracy, our fundamental right to self-determination, our democratic national and policy sovereignty, our independence, as non-negotiable matters of principle.
We waged our liberation struggle, our struggle for freedom and social emancipation, not in order to hand over control of our country and policy determination to foreign finance monopoly capital or supposedly multi-lateral international financial institutions whose recent history has been highly detrimental to the countries of the global south.
As part of our continuing anti-colonial and anti-imperialist struggle, the struggle for freedom and social emancipation, the SACP is correctly aligning with the global struggle for the transformation of multilateral bodies and international financial institutions. Accordingly, we called for, and reiterate our call for debt relief and the scrapping of the unsustainable debt, interest and penalties that stand in the way of development, employment creation, poverty eradication and advances in other human development indicators in formerly colonised countries, not least in Africa.
This just cause includes the necessity to maintain vigilance on international financial institutions, support for mobilisation of interest free international funds and, if borrowing is absolutely necessary, for low cost, affordable finance not tied to conditionalities. In particular, the SACP is strongly opposed to any conditionality that may take away, undermine, subvert or subordinate our hard-won democratic right to choose, as a people, our own development path and policies and our democratic national development goals. However, even in that instance, the SACP calls for approaches that will be sustainable both for our current and future generations. The SACP is pleased about the consensus that emerged in the Alliance Political Council on these questions. Continuing consultation, transparency and accountability remain crucial. This includes collective leadership and ongoing scrutiny of the approaches being followed.
Our concern about seeking loans from the Washington consensus based International Monetary Fund (IMF) and World Bank quarters was not based on some ill-informed visceral dislike of the ‘acronym’ IMF or name World Bank, but on the reality that from the late 1970s these institutions rejigged their earlier, post-World War II role of helping to rebuild war-torn economies, principally in Western Europe. The two international financial institutions were now redeployed to squeeze the last drop of debt repayment out of Third World countries that had become enmeshed in debt crises to private Western banks. In the mid-1970s, these private banks, awash with petro-dollars following the Organisation of the Petroleum Exporting Countries (OPEC) induced oil price hike, had lent lavishly and unwisely to many countries, including newly independent societies in Africa. The debt on these loans was simply unsupportable.
While there are some indications that the IMF and World Bank are offering low interest Covid-19 loans we need to appreciate two things. First, the fight against Covid-19 will not likely be out of charitable concern from these quarters but a strategic imperative. In a highly globalised world economy the impact of the pandemic in the periphery and semi-periphery threatens the whole system. Secondly, an IMF loan, however low the interest rate and however minimal the conditionalities, will be dollar denominated. One of the current relative strengths of the South African economy, amidst our many challenges, is that, compared to many peer group countries, the great majority of our public debt is rand-denominated. With the rand-dollar exchange rate volatile and sliding unfavourably for us, the importance of funding our emergency response from domestic resources as much as possible, if not entirely, bears emphasising.
The SACP agrees with the President, that we cannot and must not go back to the pre-Covid-19 economic and social reality. We need to advance, in particular, and both in theory and practice, the second, more radical phase of our national democratic revolution, our democratic transition.
ISSUED BY THE SOUTH AFRICAN COMMUNIST PARTY | SACP
EST. 1921 AS THE COMMUNIST PARTY OF SOUTH AFRICA | CPSA
Dr Alex Mohubetswane Mashilo
Central Committee Member: Head of Media & Communications
FOR INTERVIEW ARRANGEMENTS, MEDIA LIAISON & CIRCULATION SERVICES
Hlengiwe Nkonyane
Communications Officer:
Media Liaison, Social & Multi-Media Digital Platforms Co-ordinator
Mobile: +27 79 384 6550
OFFICE, WEBSITE, SOCIAL & MULTI-MEDIA DIGITAL PLATFORMS
Office: +2711 339 3621/2
Twitter: SACP1921
Website: www.sacp.org.za
Facebook Page: South African Communist Party
