The central bank warns of the harmful effect of Covid-19 on the economy, while the treasury details more plans to ease the pain.
and South Africa has not been spared. The International Monetary Fund expects the global economy to contract sharply by –3% in 2020, which is much worse than during the 2008–2009 financial crisis.
On Tuesday, the Reserve Bank cut the repo rate by 100 basis points, or one percentage point. This brings South Africa’s repo rate to 4.25%. In March, the central bank cut the repo rate by one percentage point and in January it lowered the rate from 6.5% to 6.25%. He said the extension of the lockdown will no doubt reduce growth and deepen economic woes in the short-term because economic activity has come to a halt.
Mboweni said the department of health cannot be “ wanting” during the country’s fight against the coronavirus and this requires that the government reallocate its funds. He added that this reallocation of the funds was not an “emergency budget”. The crisis also presents an opportunity for the government to rework its position on ailing state-owned enterprises that continue to drown the fiscus. The finance minister said the closure of SAA and SA Express, which are both in business rescue, will be evaluated.
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