Abstract
This paper assesses the outcomes of the Special COVID-19 Social Relief of Distress Grants (SRDG) program. A gratuity of R350 ($26.5) per person and per month was granted to low-income households following a national lockdown on 26 March 2020, aimed at alleviating the spread of the COVID-19 pandemic. Although, children and elderly grants are excluded from this program, the study focuses on cash transfer programs in terms of their role in increasing current consumption of poor households and enabling them to gain capitals. We assess the general equilibrium effects of the cash transfer through the usage of a static computable general equilibrium (CGE) model calibrated to South Africa's social accounting matrix (SAM) for 2015. Our simulation results indicate that the SRDG program improved the real incomes and consumption for all households. This result is consistent with the findings of Londoño-Vélez & Querubín (2022) and Ashfaq & Bashir (2021), who studied the impact of emergency cash assistance during the pandemic in Colombia and Pakistan. The decline in GDP (-0.1021%) is cushioned by the fact that both exports and imports were negatively affected as the lockdown restrictions obstructed all international trade activities. Despite the welfare gains, South Africa's fiscal and macroeconomic indicators suggest that the program is likely better considered as an automatic stabilizer in fiscal and social policy planning rather than as another component of social protection. The shock applied to the economy is limited to the total amount of the cash transfer allocated by the government. A static CGE model seems suitable in this study as econometric analysis is unsuitable for the simple reason that there is lack of time series data. The originality of this study lies in the use of the CGE model for assessing the outcomes of such cash transfer to low-income households in South Africa.
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