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- SA president announces massive social relief and economic support package of R500 billion.
- The money will be sourced from its adjustment budget, the Unemployment Insurance Fund and multilateral institutions
To manage the economic crisis caused by COVID-19 and 35-day lockdown, South Africa’s President Cyril Ramaphosa has announced a massive social relief and an economic support package of R500 billion, which amounts to around 10% of GDP. The money will be sourced from its adjustment budget, the Unemployment Insurance Fund and multilateral institutions. The multilateral institutions approached include the World Bank, the New Development Bank, the International Monetary Fund and the African Development Bank.
In his address to the nation, he said a phased approach will be adopted to reopen the economy. He acknowledged the devastating effect on the economy due to the nation-wide lockdown and said that priority will be given to intensify the health interventions needed to contain and delay the spread of the disease to save lives.
The pandemic he said called for an economic response that is equal to the scale of the disruption which can be divided into three phases. The first phase which began in mid-March announced the coronavirus pandemic as a national disaster initiating several measures to mitigate the worst effects of the pandemic on businesses, on communities, and on individuals. These measures included tax relief, the release of disaster relief funds, emergency procurement, wage support through the UIF, and funding to small businesses. The current and second phase of economic response will focus on stabilising the economy, address the extreme decline in supply and demand and protect jobs. The third phase will focus on the economic strategy to drive the recovery of the country’s economy as it emerges from this pandemic. The primary stress of the economic recovery strategy will be on stimulating demand and supply through interventions such as a substantial infrastructure build programme, the speedy implementation of economic reforms, the transformation of the South African economy, and embarking on all other steps that will ignite inclusive economic growth.
