IMF BOARD APPROVES $4.3 BLN LOAN TO HELP SOUTH AFRICA

Tue 28 July 2020:

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 IMF approved $4.3 billion in emergency financial assistance under the Rapid Financing Instrument (RFI) to support the authorities’ efforts in addressing the challenging health situation and severe economic impact of the COVID-19 shock,” the

South Africa is the continent’s most-industrialized economy and has the largest number COVID-19 cases, with more than 445,000 detected and 6,769 deaths as of Monday, according to the Africa Centers for Disease Control and Prevention.

South African Finance Minister Tito Mboweni in June predicted the economy would shrink 7.2 percent in 2020, its deepest slump in 90 years, and compared the ballooning public debt to a “hippopotamus… eating our children’s inheritance.”

The South African treasury said the IMF money would go towards stabilizing the debt, creating jobs, helping frontline health workers fighting COVID-19 and reforming the economy to spur growth.

The IMF Executive Board today approved US$4.3 billion to help South Africa address the socio-economic impact of #COVID19. https://t.co/ZaSgRuFaTP #IMFAfrica pic.twitter.com/VulX33c6V1

— IMF (@IMFNews) July 27, 2020

According to economists from the Bureau for Economic Research (BER), commenting on the latest developments and data published in South Africa.

Stats SA published details on food and beverage, retail and wholesale trade sales for the months of April and May. These three sets of data provided a consistent message with four key trends visible, the BER said.

These were:

• A plunge in activity during April with historic monthly and annual declines;
• A sharp monthly increase in May from the April low;
• Sales that continued to see a sharp annual decline in May;
• Activity levels that remained well below pre-Covid levels in May.

Trade data from Stats SA showed that retail sales collapsed by 50.4% year on year in April, as stringent level 5 lockdown regulations prohibited sales of non-essential goods. The print was the largest decline on record.

“Monthly sales dropped by 50.7% in April. This was followed by a 74.2% month on month increase during May as the country moved into level 4 lockdown, which permitted more consumer good to be sold,” the group said.

The main contributors to the annual decline in May were all other retailers (-6.5% pts), retailers in food, beverages and tobacco in specialised stores (-2.2% pts) and general dealers (-2.1% pts).

Meanwhile, after contracting by 35.4% m-o-m in April, wholesale trade sales rose by 29.7% m-o-m in May. On an annual basis, sales of wholesalers were still down by 20.7% in May.

However, although the month on month rebound was strong, the level of retail sales was still down by 12% on an annual basis in May, it said.

Think your friends would be interested? Share this story!