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COVID-19 Financial Stimulus Package: Where the money is coming from

The president on 21 April 2020 announced that a historic financial package to deal with the socio-economic impact of COVID-19. The financial package is notable in its size as well as the scope of its proposed purpose.


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Cyril Ramaphosa has committed to making R500 billion available to businesses and individuals to mitigate the impact of COVID-19 and the lockdown; which has brought the economy to a standstill.

The money which is equivalent to 10% of the country’s GDP will be sourced from adjustments to the current budget as well as from external organisations such as the IMF, African Development Bank and the BRICS Bank.

The president announced that R130 billion of the package would be repurposed from the existing budget.

The Finance Minister, Tito Mboweni is expected to release an adjustment budget in the coming days, which should give more detail on how the funds have been freed up.

The remainder of the funds will be sourced from external funders. The government had been circumspect about lending money to deal with the COVID-19 crisis.

South Africa in need of funding

As recently as last week, Mboweni showed an unwillingness to approach the World Bank for loans due to the strain the terms of such loans could put on the country in the future.

The president’s announcement this evening is an admission that South Africa will need funding from international institutions if we are to adequately support our economy and its citizens.

According to President Ramaphosa’s address, these financial institutions have prepared financial products specifically for country’s that are battling the economic fallout of COVID-19.

So what are the financial institutions we expect the government to approach:

International Monetary Fund (IMF)

The International Monetary Fund is possibly one of the most well-known institutions the president mentioned.

The IMF have been in existence since 1944 and is made up of 189 countries and aims to “foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.”

The fund is headquartered in Washington D.C. and stood at $667 billion as at 2016 and is able to extend loans to countries during financial crises.

New Development Bank (BRICS)

The New Development Bank was formerly known as the BRICS development bank. The multilateral development bank was established by the BRICS states (Brazil, Russia, India, China and South Africa).

The bank exists to “support public or private projects through loans, guarantees, equity participation and other financial instruments.”

The bank is headquartered in BRICS Tower, Shanghai and the first regional office of the National Development Bank is in Johannesburg.

African Development Bank

The African Development Bank – also known as the Banque Africaine de Développement – is a multilateral development finance institution based in Abidjan, Côte d’Ivoire.

The institution was founded in 1964 and comprises three entities: The African Development Bank, the African Development Fund and the Nigeria Trust Fund.

Its mission is to fight poverty and improve living conditions in Africa. It does this by promoting the investment of public and private capital in projects and programs that are likely to contribute to the economic and social development of the region.