R350 grant is extended
AID: Until March 2024
Millions of South Africans currently relying on the Covid-19 social grant can breathe a sigh of relief as it will be extended until March 2024.
Finanace Minister Enoch Godongwana announced the extension of the Special Covid-19 Social Relief of Distress Grant on Wednesday in Parliament during the Medium Term Budget Policy Statement (MTBPS), reports Weekend Argus.
The grant of R350 was originally introduced in May 2020 as a temporary measure to support poor households during the pandemic’s lockdown. At present, 7.4 million people are dependent on the grant.
“Given the large cost of extending this grant, increases to other social grants in 2023/24 will be slightly below inflation and other social welfare priorities may remain unaddressed,” he said.
In the 2022 Budget, the government extended the grant for five more months. As noted then, the introduction of a new grant in the fiscal framework is a permanent spending increase. To be sustainable, it needs to be financed with permanent increases in revenue, reprioritised spending, or a combination of the two.
Discussions are still under way to consider options for a replacement for this temporary grant.
“No final decision has been made about a replacement or how it would be financed. As a result, the temporary grant will be extended for one year until March 2024,” read the MTBPS.
Assuming the current grant value and take-up rate remain constant and it is extended indefinitely, the cost of the grant could grow at an average of 8.8% per year to reach R64.9 billion in 2030/31. Without a permanent source of funding, this would threaten the sustainability of the public finances.