It is clear that the Economy has completely collapsed or been made to collapse under the auspices of "State of Disaster" and the IMF has been brought back via the same window to exercise full control of the wealth of the sovereign state,whilst SA's sovereignty has been surrendered to IMF and the few rich "investors" at the expense of the poor and entire Nation.
In dicepting the SARB incompetence,paralysis and compromised, inefficient and incompetent Governor and its leadership issues,Scholars had this to say:
Budget Deficit : When Budget Deficit is is financed through Foreign Loans which constitutes/result in an INFLOW of Foreign Capital this therefore creates or constitutes a link between the Budget Deficit and Balance of Payments; this happens through the Crowding Out which is defined as:
A phenomenon occuring when increased government involvement in a sector of market economy substantially affects the remainder of the market in this case on the demand and supply side of the market
Crowding Out Concept takes two forms viz. Crowding Out on Exports which is when there is not enough goods ( Production) to meet export demands.
The current SA scenario caused by covid19 lockdown can be equated to Agricultural drought over the years except that in this case
the State of Disaster affects all sectors and industries hence the shortage of export goods include all natural resources including minerals resources whose production had all been halted during lockdown period
as a result there are undoubtedly huge Supply-side restrictions which lead to not only bottleneck and constraints on export levels BUT a total Collapse or Stoppage of productivity further resulting in zero Exports, the effect is:
a decline in Gross Domestic Products and therefore a negative effect on the Balance of Payments thus
the worry of SARB governer should not only be hyper-inflation but the entire BOP which is thrown way out for the entire 2020 as a result of lockdown
ON FISCAL POLICY FAILURES
Policy Lags: These are caused by the bureacratic nature of the structure of the state,which results into months and in some cases years before a policy is implemented, in which case it may have lost relevance given the fast pace of changes and development especially within the sectors which have for the past five years ( or so), been flagged as best performers and GDP contributors according to STATS-SA reports. these sectors are ICT sector followed by Agriculture and Tourismn sector.
Observation Lags: Occuring during time of occurence of a disturbance and observation ( or analysis of impact) and implementation of Corrective measures. In this case a befitting example is the recent Covid19 lockdown which has wiped off the economy in the past six months, yet in SA there seems to be no PLAN nor programme in place for Reconstruction of a Sustainable Economy that would serve the Nation and have the entire Nation as active participants and benefactors in that Economy.
Internal Policy Lags: Decision Lag which is the time it takes for policy makers to realise that an occurence has happened and taking a firm decision to come up with Action Steps: If again we use the Covid19 Lockdown-Economic collapse and the still absent Action Programme to Reconstruct the Economy. Regardless of the other impeding factors that exacerbate the situation there can be no justification for the delay in taking decisions to actually come up with implementable policy programmes.Policies of any organisation and/or state organs should be responsive to emergencies/disasters affecting the people/Nation and when it comes to Budget compilation and re-adjustment the same flexibility and responsiveness should be observed. A Budget re-allocation in cases of emergencies/disaster should be formally incorporated as a key component of National Treasury and other organs of the State if National Treasury which is responsible for fiscal policy and its implementation is to serve the purpose and functions for which it was established and is responsible for, in alignment with the State-ANC as the Governing Party's Economic Policy. The National Treasury should not loose site of the fact that their function is that of an Enabler and expert Advisers not decision makers,any confusion of role on their part may and will continue to cause conflict between them as a department and the Presidency Office as the "CEO" of Government as an Institution.
The Administration Lag: Time taken to effect or execute Policy decisions: An example of this is what has become the scewed SA Economic scenario which as President Mbeki once defined as more than one Economies within the same country viz. Rich; Poor and Poorest of the Poor. The Administration lag could have been avoided in SA if the ANC's Mogorogo Policy Blueprint had been included in the CODESA negotiations, adopted and implemented from inception of 1994's first democratic GNU instead of inheriting damaged Apartheid Economic Policies( status quo) and badly ridden Economy from sanctions and Dis-Investment of Apartheid regime in the late 80s to early 90s.
External Policy Lag: This is time lag between policy implementation and the impacts of that begin to show or yield results. An example of this with regards to Fiscal Policy is Infrastructural development which the Administration of President Zuma embarked on viz. as an example Rail and Road infrastructure most of which resulted in road construction projects such as the road and bridge that links Mozambique and SA directly via the KZN route,this unveiled in 2019 at their completion has been hailed as playing a critical role in SADC-KOmati Corridor.
To avert this state of Economic disaster and COLLAPSE the following recommendations are put forward:
Return back the IMF loan immediately and cancel whatever contracts which would have been rushly signed with IMF during March-April 2020 period. This should not be a difficult nor far-fetched task to execute since by the president's own admission in his 15 October speech only about 2% of the said acquired loan has been used/disbursed.
An Economic Reconstruction Programme be Compiled and implemented which programme should be guided by the ANC's Blueprint Economic Policy being the governing party as stipulated in 1969 during the Mogorogo conference and further broken down into implementable programme contained in the 2017 ANC54 conference resolutions.
The ANC take and adopt a mixed form of Economy which will neither yield to the Capitalist/Monopolist/Neoliberal/Socialist as a fine tooth combining into the president's "PLAN" objectives seeks to make all of these proponents happy and accommodated. A mixed form of Economy should be guided by the ANC Policy Document and Basic Economic Growth Policy as these two pieces of policy framework are not far apart from each other.
Key to the implementation and Reconstruction programme should be Economic Development with specific emphasis on :
Local Economy
Emerging Markets
Manufacturing support, boost local production and conversion of primary resources into consumable goods as primary industries which will also create space and enable the ressurance of secondary, third and fourth Industries eg Agriculture : livestock farming-to hides and skin-textile industry-to Retail which then necessitates markes /malls completing the entire value chain
Technology must be taken into consideration and the inventions and new markets enabled by it embraced in the Reconstruction of the new economy viz. such as digital migration and new crypto currencies which are fast playing a dominant role in currency exchange.
Retraining and re-skilling programmes have to be recognised and incorporated in the programme as an essential as catching up and success reconstruction will depend on the people at all levels and throughout getting new skills for them in order to be employable, and becoming active participants in the new reconstructed Economy. This Human Capital Development talks to the Fourth Basic factor of Production viz. Labour as it will always be a relevant factor that is important in any society's Economic Growth Objective regardless of how advanced technology is it can never self-drive completely and driving out the Human aspect completely is to to create a society that would be dependant on government hand-outs which is in tanderm with Sustainable Economic Growth Objective
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