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By Nqobile Dludla and Alexander Winning
JOHANNESBURG, April 21 (Reuters) - South African President
Cyril Ramaphosa announced a 500 billion rand ($26.3 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, 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 130
billion rand of reprioritised spending and other local sources.
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.
Early on in South Africa's coronavirus crisis, Ramaphosa
took drastic measures to try to prevent the kind of runaway
epidemic that has devastated the United States and much of
Europe.
At the end of March, he 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, when South Africa had just 400 cases.
He also deployed the army on the streets to enforce it, and
rolled out mass testing that has so far seen 127,000 people
tested, of whom 3,465 are positive, according to the latest
ministry of health figures. Fifty-eight people have died.
While the measures appear to have halted a steep rise in new
cases, the economic impact of the lockdown is wreaking havoc on
an economy that was already in recession, and with a third of
the country out of work.
It also threatens to push South Africa's poor, who on one
measure make up half of the country, deeper into poverty.
'RISK-ADJUSTED APPROACH'
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 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.
The government had come under pressure to act boldly to
mitigate the economic impact of the virus.
South Africa's largest trade union federation, COSATU, urged
the government, companies and financial institutions on Tuesday
to fund a roughly 1 trillion rand economic stimulus plan to
prevent unemployment rising above 50% from the current level
around 40%, according to a broad definition of unemployment.
Ramaphosa resisted that call.
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 grant.
($1 = 18.9869 rand)