S.Africa's Ramaphosa pledges COVID rescue package worth 10% of GDP

South Africa’s President Cyril Ramaphosa announced a 500 billion rand ($26.33 billion) rescue package on Tuesday, equivalent to 10% of the GDP of Africa’s most industrialised nation, to try to cushion the economic blow of the Coronavirus pandemic.

“The pandemic requires an economic response that is equal to the scale of the disruption it is causing,” he said in an address on national television, pledging to “address the extreme decline in supply and demand and to protect jobs.”

Ramaphosa said South Africa had approached global financial institutions like the World Bank, IMF and the African Development Bank to help fund the package.

“As part of this phase, we’re announcing this evening a massive social and economic support package of 500 billion rand, which amounts to about 10% of our GDP,” he said.

Among the measures were 200 billion rand in loan guarantees in partnership with the central bank, finance ministry and commercial banks, and tax deferral for firms with more than 100 million rand turnover.

At the end of March the president announced one of the toughest lockdowns anywhere in the world, banning anyone but essential workers from leaving home except to buy food or medicine, and prohibiting alcohol sales.

The measures appear to have halted a steep rise in new cases, but the economic impact of the lockdown is wreaking havoc on an economy that was already in recession, and it threatens to push South Africa’s poor, who on one measure make up half of the country, deeper into poverty.

Ramaphosa pledged to prioritise “the relief of hunger and social distress across our communities,” including with the distribution of 250,000 food parcels in the coming week.

($1 = 18.9869 rand)