The economic effects of the coronavirus crisis have been extensive and a recovery to pre-pandemic levels will take several years. Current forecasts from the IMF show global gross domestic product (GDP) contracting by about 4.9% this year, although the general economic outlook has improved somewhat. Second quarter GDP outcomes for most economies have been massively negative, as expected. At this stage, third and fourth quarter recoveries for 2020 are expected to be robust. However, the pace of growth into 2021 could be modest, depending on control of new virus outbreaks, the extent of supply and demand losses, and future growth in investment and productivity.
The Covid-19 outbreak has had major health, social and economic impacts, presenting difficulties in forecasting domestic and global economic activity. The compilation of accurate economic statistics has and will remain severely challenged.
Risks to the growth outlook are assessed to be balanced, but this is tentative and open to adjustments given the wide range of shocks hitting the economy, uncertainties involving the effectiveness of policy, and the sensitivity of sentiment to news flow. The exceptionally accommodative policies in many advanced economies and improved economic outlooks have supported a partial recovery in global financial markets. But this has so far resulted in only a trickle of fresh capital flows to emerging markets, and financing conditions remain uncertain.
The sharp rise in South Africa’s public financing needs arising from falling tax revenue and higher spending has been financed by higher private sector savings and borrowing from international financial institutions.
The overall risks to the inflation outlook at this time appear to be balanced. Global producer price and food inflation have bottomed out. Oil prices remain low. Local food price inflation is expected to remain contained. Risks to inflation from currency depreciation are expected to stay muted while pass-through remains low. While there are no demand side pressures evident, electricity and other administered prices remain a concern. Additional exchange rate pressures could result from heightened fiscal risks. Importantly, expectations of future inflation continued to soften this year and have shifted slightly below the mid-point of the band for 2021. Market-based expectations for short and medium-term inflation have eased slightly, while longer-term inflation expectations remain higher.
The potential growth rate of the economy should be addressed by implementing prudent macroeconomic policies and structural reforms that lower costs generally, and increase investment opportunities, potential growth and job creation. Global economic and financial conditions are expected to remain volatile for the foreseeable future. In this highly uncertain environment, future decisions will continue to be data dependent and sensitive to the balance of risks to the outlook.
SARS Interest Rates
The economic impact of the lockdown has been crippling on our economy. As part of the monetary policy to help boost the economy, the Reserve Bank has made a number of rate changes to the repo rate this year. As the interest rates are linked to the repo rate, banks and other suppliers of credit have reduced lending rates accordingly.
SARS has also amended their interest rates for the various categories as per the prescribed acts. Accordingly, we have summarised the various changes during the year so that you can, at a glance, see the impact. These tables are set out below and, should you have queries in this regard, do not hesitate to contact us in this regard.
It is the hope of SARS that by doing this the economy will stabilise and become maintainable. Should you require further assistance with regards to the above, please do not hesitate to contact our offices for professional advice.
*PFMA – Public Finance Management Act
Mandatory Compliance Checklist
The Companies and Intellectual Property Commission (CIPC) is tasked with ensuring, monitoring and enforcing compliance with the Companies Act. In pursuance of this function, the Commission issued Notice 52 of 2019 dated 13 August 2018, which came into effect from 1 January 2020. The Notice announced that a new mandatory Compliance Checklist would be required to be completed and submitted by all categories of companies (but not a Close Corporation or “CC”). The Checklist had to be submitted to the commission before the relevant company’s Annual Return could be submitted.
The Commission then issued Notice 9 of 2020, dated 3 March 2020, which has amended Notice 52. This new Notice provides that as from 5 March 2020, the Checklist will still apply to companies only if their annual financial statements are audited or independently reviewed. The Checklist still does not apply to a CC. This is now a standalone service, and must be completed by the applicable company within 30 business days after the anniversary of the company’s date of incorporation. The period for which the company declares its compliance is to be known as its “Compliance Year”, and is aligned to the anniversary date of its incorporation.
The Checklist requires that the company declare its compliance status to certain Sections, Regulations and Schedule 1 of the Act, as follows:
- Section 4: Solvency and Liquidity
- Section 15: Memorandum of Incorporation (MOI), shareholder agreements and rules
- Section 26: Access to company records
- Section 27: Financial year of company
- Section 28: Accounting records
- Section 29: Financial Statements
- Section 30: Annual Financial Statements
- Section 32: Use of company name and registration number
- Section 33: Annual Return
- Section 44: Financial assistance for subscription of securities
- Section 45: Loans or other financial assistance to directors
- Section 50: Securities Register and numbering
- Section 61: Shareholders meeting
- Section 66: Board, directors and prescribed officers
- Section 69: Ineligibility and disqualification of persons to be director or prescribed officer
- Section 70: Vacancies on board
- Section 72: Board committees
- Section 86: Mandatory appointment of company secretary
- Section 90: Appointment of auditor
- Section 92: Rotation of auditor
- Section 94: Audit committees
- Regulation 21: Registered office of the company
- Regulation 43: Social and Ethics Committee
- Schedule 1: Provisions concerning Non-Profit companies
It is ultimately the responsibility of the directors to ensure compliance and completion of the Checklist. Any person who completes it incorrectly or fraudulently can be held responsible, as follows:
- Section 215(2)(e): a person commits an offence who knowingly provides false information to the Commission
- Section 216((b): any person convicted of an offence is liable to a fine or to
- imprisonment for a period not exceeding 12 months, or to both a fine and imprisonment
Should you require advice regarding the compliance checklist do not hesitate to contact us for professional advice.