The second-largest economy in the continent—South Africa, is racing to beat the coronavirus global pandemic, as on Tuesday the South African President Cyril Ramaphosa announced a $ 25.3 billion rescue package to cushion the most industrialized nation in the region from the consequences of the pandemic, according to information from Reuters.
As the nation swims in its second recession in two years, the coronavirus (COVID-19) has caused the nation’s economic activities to stop due to mandatory lockdowns to curb the spread of the virus.
South Africa, which has over 3,400 confirmed cases and 58 deaths, will experience a rather bitter toll on her economy as experts forecasted that in the first three-month, growth is expected to contract by 1.5 per cent.
The southern Africa nation has been serious about the pandemic, as it rolled in one of the region’s toughest lockdowns banning anyone but essential workers from leaving home except to buy food or medicine, and prohibiting alcohol sales.
The South African President—who is also fighting to save the nation’s economy hurting prior the pandemic, said during a national address televised, that “The pandemic requires an economic response that is equal to the scale of the disruption it is causing,”
Further Ramaphosa, said that his government is working on addressing the extreme decline in supply and demand and to protect jobs and a deep problem even to past administrations.
However, according to information from Reuters, Ramaphosa said South Africa had approached global financial institutions and Africa’s biggest lenders such as the World Bank, International Monetary Fund (IMF), the BRICS New Development Bank and the African Development Bank, primarily to fund healthcare interventions.
Also, the rest of the package would be financed by a mix of $6.8 billion (130 billion rands) of reprioritized spending and other local sources.
On the other hand, the rescue fund stands to cushion the nation’s industrial complex, as Reuters reported that, the South African unit of Toyota could see its production drop by around 15-20 per cent in 2020, its president and CEO Andrew Kirby said on Wednesday.
The carmaker chief highlighted that the division had already lost production of around 13,500 units due to a nationwide lockdown in South Africa, set to last five weeks. It’s annual production volume normally stands at around 135,000-150,000 units.
Among the measures were $ 10 billion (200 billion rands) in loan guarantees in partnership with the central bank, finance ministry and commercial banks, and tax deferral for firms with more than $5 billion (100 million rands) turnover.
The South African government had come under pressure to act boldly to mitigate the economic impact of the virus.
According to information from Reuters, South Africa’s largest trade union federation, COSATU, urged the government, companies and financial institutions on Tuesday to fund a roughly $ 52 billion (1 trillion rand) economic stimulus plan to prevent unemployment rising above 50 per cent from the current level around 40 per cent, according to a broad definition of unemployment. Ramaphosa resisted that call.
Also, the president said he would help support those most badly affected by the coronavirus by increasing child-support grant payments and paying special benefits to those who are unemployed and do not receive any other form of a grant
However, the president highlighted the distribution of 250,000 food parcels in the coming weeks, and to reopen the economy as soon as it is feasible to do so.
“We will follow a risk-adjusted approach to the return of economic activity, balancing the continued need to limit the spread of the coronavirus with the need to get people back to work,” he said.
Hence, the rescue package stands to turn things around for Africa’s second economy, as data from the Statistician show South Africa’s headline consumer price inflation slowed to 4.1 per cent year-on-year in March, from 4.6 per cent in February
