The International Monetary Fund will lend South Africa $4.3 billion in emergency financial support to help the country repair the catastrophic economic damage wreaked by the COVID-19 pandemic.

The South African economy is expected to contract by more than 11 per cent as it buckles under the lockdown imposed in March to try to ward off the disease that has claimed nearly 7,000 lives in a matter of months. Three million South Africans have lost their jobs – nearly a third of the working population with formal jobs. Economists fear many more jobs could be lost as cash-strapped companies go down like dominoes.

“The additional IMF funding is a low interest loan that contributes to government’s fiscal
relief package while respecting South Africa’s decisions on how best to provide relief to
the economy and those worst affected by the current crisis. It will also pave the way for
government to provide the necessary financial relief required to forge a new economy and
mitigate further harm to the economy, ” Treasury said in a statement.

The money will go to frontline health services, job creation, stabilising public debt and reforms to encourage job creation.

“Government’s Covid-19 economic support package directs R500 billion straight at the problem. This is one of the largest economic response packages in the developing world. The South African Reserve Bank has reduced interest rates and made it easier for banks to lend money, and supported liquidity in the domestic bond market. Government spending and tax proposals, guarantee scheme and wage protection measures, are providing
protection to workers and the poor, while assisting to stay afloat during these tough
economic times. Going forward, our fiscal measures will build on our policy strengths and
limit the existing economic vulnerabilities which have been exacerbated by the Covid-19
pandemic,” says South African finance minister Tito Mboweni.

Mboweni, presented a Special Adjustments Budget in Parliament on June 24 as part of government’s key interventions to the Covid-19 pandemic. This loan from the IMF goes some way to financing those measures.