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South Africa’s Bold COVID-19 Rescue Plan

The country’s Finance Minister said in the month ahead, government’s response will be in three phases: “Phase 1 is the phase we are currently in, which aims to preserve our economy. It is designed to be a set of immediate, targeted and temporary responses. Phase 2 is a plan for recovery from the immediate effects of the crisis. Govt will outline these in due course. Phase 3 is a pivot to position the economy for structurally higher growth.” Earlier this week, President Cyril Ramaphosa announced a $26.3bn rescue package, equivalent to 10 percent of the gross domestic product of his country, to try to cushion the economic blow of the coronavirus pandemic. Ramaphosa said South Africa had approached global financial institutions like the World Bank, International Monetary Fund, the BRICS New Development Bank and the African Development Bank, primarily to fund healthcare interventions. The rest of the package would be financed by a mix of $6.9 bn of reprioritised spending and other local sources. Among the measures were $10.6bn in loan guarantees in partnership with the central bank, finance ministry and commercial banks, and tax deferral for firms with more than $5.3m turnover.