By Seth Meyer
This article is exclusive to the Online Edition 3 of VARSITY News.
The South African economy has been in a state of great stress since the commencement of a national lockdown on the 27th of March, 2020, seeing a total shutdown of all business and activity deemed non-essential. The impact is felt not only under the weight of a 35-day lockdown, but the global effect and ubiquity that the Covid-19 pandemic has had on markets across the world.
The Rand has weakened significantly in the face of the pandemic, currently trading at R18,27/ $, although the national currency has rallied recently as President Ramaphosa announced an easing of lockdown measures to begin on May 1st, as well as, on the 21st of March, a 500-billion rand stimulus package aimed at providing welfare and helping businesses recover from under the pandemic. The package, the largest of its kind on the continent of Africa, pledges R350 a month to the unemployed without social grants or UIF payment, as well as 20 billion rand to aid in efforts related to the pandemic.
Minister Tito Mboweni has forecast a shrinkage of South Africa’s economy by up to 6.4% and noted the concern of the lack of tax revenue created by the lockdown, the minster stating that, “Government debt could go as high as 80% of the GDP.” Mboweni is currently working on tabling an adjusted budget, one that will help provide funding for the President’s proposed stimulus package.