Ratings agency Moody’s says South Africa’s economy will contract by 6,5% in 2020. Moody’s says the R500-billion stimulus package announced by President Cyril Ramaphosa will weaken public finances and constrain government’s ability to provide support to state-owned entities such as South African Airways and Eskom.
However, Moody’s says research shows that economic growth should recover by 4.5% in 2021. The stimulus package announced by President Ramaphosa equals to 10% of the GDP of Africa’s most industrialised nation.
South Africa has 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 R130-billion of reprioritised spending and other local sources.
On Friday, Finance Minister Tito Mboweni said COVID-19 expenditure has changed the fiscal framework and he will soon be tabling a new budget bill before Parliament.
He also said that together with the Reserve Bank, over R800 billion in interventions are being made to assist the economy and the fight against coronavirus.
Breakdown of the stimulus package below: