By now, we’ve all seen the headlines about South Africa’s 51% GDP contraction for the second quarter of 2020, a 16.4% decrease compared with the first quarter. While it bounced back in the third, it’s still worrying. Stats SA reported an unemployment rate of 35% in the second quarter and bank processing data have revealed that only one in five South Africans has received their full salaries since April 2020.
We always knew the national lockdown meant sacrificing economic growth for the sake of containing Covid-19. And South Africa is not alone: the world is grappling with the fallout of what will probably be a deep recession for years. So, how do you continue to pay a public sector wage bill of R640-billion and make good on your plans for social grants and financial relief? The answer is, borrow more money.