THE REPUBLIC OF SOUTH AFRICA MAY GO BANKRUPT

The COVID-19 pandemic can lead to bankruptcy of about 100 thousand companies operating in South Africa. According to the economist David Rudt, such a trend is very likely amid increase in fatality rate in the country.

The problem is also complicated by the mass layoffs of the employees, which inevitably accompanies bankruptcy. According to the experts, this situation will cause the loss of work for almost two million employees, and existing funds will not be able to help all the victims.

About 71% of South African companies do not have sufficient financial pillows to keep their business afloat.

This situation, according to the sources of the state department engaged in small business, is typical for almost all sectors of South African business. The economy, according to the sources, is rapidly declining - this also affects the state budget shortfall.

The most industrialized economy among African countries is on the verge of crisis related to its sovereign debt. Such a statement was made by the Minister of Finance of South Africa Tito Mboveni. According to him, the country's revenue 7% decline is projected due to the pandemic and the external debt servicing. The budget shortfall may be about 15% of GDP, and the public debt will grow up to 80% of GDP. This is significantly higher than the previous forecast, which was about 66% of GDP. Tax revenues cannot reach $ 17 billion to allow the country “breathe deeply”.

As Mboveni noted, South Africa runs the risk of becoming bankrupt due to the debt crisis, just like Argentina.

The country's authorities are currently conducting rather tough negotiations on the issue of foreign loans of $ 4 billion with the IMF representatives. It is expected that the agreement can be concluded in July. At the same time, as it is noted in the treasury, the government borrowing might be doubled this year.

South Africa took first place among the countries of the African continent in the number of patients with COVID-19. Outbreaks of disease have sharply worsened in Cape Town and Johannesburg. President Cyril Ramafosa, who introduced a number of restrictions at the very beginning of the pandemic, is now forced to open the borders of the country for business. Like most developing countries, South Africa faced great economic expenses related to the pandemic. As a result, on 17 June, after consultations with the industry representatives, the president announced that citizens were allowed to visit restaurants, cinemas, casinos and business meetings.