The Board of Directors of the African Development Bank (AfDB) has approved a loan of approximately R5 billion ($288 million) to the government of South Africa, as the country battles one of the largest Covid-19 cases in the world. This is the Bank’s first ever budget support to the country.
The first case of Covid-19 was confirmed in South Africa on 5 March 2020. South Africa holds the fifth largest number of confirmed cases in the world and largest confirmed cases of Covid-19 and deaths in Africa. The country has reported 408,052 cases with 236,260 recoveries and 6,093 deaths, according to John Hopkins Coronavirus Resource Centre.
According to the publication on AfDB website, “the loan falls under the Bank’s $10 billion COVID-19 Response Facility and will finance South Africa’s COVID-19 Response Support Program, and represents the Bank’s first ever budget support to the country. The operation is designed as a Crisis Response Budget Support Operation prepared following a request from the government of South Africa.”
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The Board of Directors of the New Development Bank (NDB) on Friday 19 June also approved a $1 billion emergency assistance program loan for South Africa, to support the government in its efforts to contain the spread of Covid-19 in the country and the reduce human, social and economic losses caused by the coronavirus outbreak.
South Africa was already experiencing an economic slump before the pandemic, although the pandemic has greatly impacted the country’s economy. In 2019, South Africa reported just 0.2% growth in GDP, which is the lowest it has registered in a decade. AfDB estimates the GDP growth could drop to the worst in 90 years in 2020. Projections show a GDP contraction of 6.3% and 7.5% under baseline and worst-case scenarios, respectively.