South Africa has announced an economic support package worth R500bn ($26bn) to mitigate against the effects of the coronavirus outbreak.
President Cyril Ramaphosa announced the package which will contain support for firms and workers as well as health and social spending as the government prepares for the phased re-opening of the economy.
“The impact of the coronavirus requires an extraordinary coronavirus budget – of around R500bn – to direct resources towards fighting the pandemic. This will include the reprioritisation of around R130bn within the current budget,” he said.
South Africa has approached the World Bank, International Monetary Fund, BRICS New Development Bank and the African Development Bank for funding.
Ramaphosa said loans would be used to fund the health response to coronavirus through treatment, more personal protective equipment for health workers, community screening, an increase in testing, additional beds in field hospitals, ventilators, medicine and staffing.
Ramaphosa announced special increases to the monthly social grants upon which about 16m of South Africa’s 58m people rely for survival.
The virus would continue to take a severe toll “in the weeks and months to come,” with many people losing their jobs, the president said.
South Africa’s central bank now projects that GDP will fall by up to 6.1% this year. The country is already in recession, having seen its economy contract by 1.9% last quarter and it is set to shrink by an unprecedented 23% this quarter.
South Africa’s lockdown is set to continue until 1 May. The country has the most confirmed virus cases in Africa with 3,465.
“If we end the lockdown too soon or too abruptly, we risk a massive and uncontrollable resurgence of the disease,” the president said.
Ramaphosa said he will give further details on a “phased approach, guided by the best available scientific evidence, to gradually lift the restrictions on economic activity.”
Meanwhile the country’s national flag carrier, South African Airways (SAA) is on the brink of collapse, according to Bloomberg.
The news outlet reported that the carrier, which is grounded due to the coronavirus pandemic and which was already facing possible bankruptcy before the outbreak, had offered a severance deal to all 4,700 of its employees.
This came after the South African government refused to provide a further bailout to the state-owned carrier and bankruptcy administrators said it was unlikely the airline could be turned around.