South Africa’s President Cyril Ramaphosa on Tuesday announced a $26 billion relief package aimed at stimulating the economy and cushion the vulnerable people during the coronavirus pandemic.
In a special address to the nation, Ramaphosa announced “a massive social and economic support package of 500 billion rand ($26.3 billion), which amounts to about 10 percent of our GDP.”
“The impact of the coronavirus requires an extraordinary coronavirus budget, the scale of this emergency programme is historical,” he said.
Before the virus arrived last month, Africa’s most advanced economy was already reeling from a recession, deteriorating public finances and a swollen budget deficit.
The economy which grew by a paltry 0.3 percent last year, is now expected to contract by 6.1 percent, according to the central bank.
Ramaphosa said a portion of the virus relief funds will be redirected from the current budget and the rest would be sourced from the local unemployment insurance fund and from global partners and international finance institutions.
South Africa is in its fourth week of a five-week lockdown imposed expected to run to the end of April.
With many people out of work or companies shut down to observe the lockdown “poverty and food insecurity have deepened dramatically in the course of just a few weeks,” said Ramaphosa.
Scenes of people fighting for food parcels or looting from supermarkets, have been reported in parts of the country.
Around $2.6 billion would be channelled towards the most vulnerable people through social grants.
Around a quarter of a million food parcels would be distributed over the next two weeks.
Ramaphosa said the country was embarking on a phase aimed at stabilising the economy and address the decline in supply and demand and protect jobs.
The unemployed and workers whose employers have been able to pay their wages, will also get relief from the fund.
An official study published earlier in the said found that almost two-thirds of businesses believed the pandemic would have a “substantially worse impact” on their business compared with the 2008/9 financial crisis.
The country has so far reported 58 deaths out of 3,465 coronavirus infections, slightly behind Egypt.
“Medical doctors inform us that we are still in the early stages of this pandemic,” Ramaphosa warned, adding that the lockdown would not abruptly end but would be eased out in phases. South Africa President Ramaphosa unveils $26bn coronavirus relief plan