Economists maintain Treasury can’t afford SRD grant

Economists maintain that the Treasury cannot afford the Social Relief of Distress (SRD) grant on the current tax base.

They argue that the economy is not growing fast enough to pay for this grant.

Currently, the R370 per month grant is paid to about 8.3 million people at a cost of just under R40 billion per year.

Earlier Tuesday, the Supreme Court of Appeal heard an appeal regarding a High Court ruling that found the SRD grant system unconstitutional for excluding millions of eligible individuals.

While other grants benefitted from an increase, the SRD was an exception.

Now, government is appealing its permanent stay in court, as this grant puts pressure on the fiscus.

Economist at Citibank, Gina Schoeman asks where the money will come from if the grant continues in its current form.

“The grant is R370 per month.

About 8.3 million people get that, so that works out to a bit under R40 billion … nothing to spare in the budget,” says Schoeman.

Government is also considering options to link the grant to skills development and employment opportunities.

A suggestion that Economist at Inani Strategies Xhanti Payi agrees with.

He references the former Statistician-General, Dr Pali Lehohla, who said the grant has become a trap, which undermines the labour force system.

“If we can use it as a bridge between people who are unemployed and struggling and how we get them to be productive and employed, overcoming some of those structural issues.

That has to meet other programs including the skills program, which are not doing very well at the moment, and that has to be part of that.