(Add details, background)
JOHANNESBURG, Jan.27 (Reuters) – Coronavirus has hit South Africa’s already struggling economy hard, and power outages by state-owned Eskom are likely to make matters worse, the International Monetary Fund (IMF) said Wednesday.
The global lender approved a $ 4.3 billion emergency loan for South Africa in 2020.
Africa’s most advanced economy was already in recession before the coronavirus hit. It also has the largest number of infections on the continent, with over 1.4 million cases and nearly 42,000 deaths to date.
The IMF expects a 7.5% contraction of gross domestic product in 2020, while growth in 2021 is expected to be only 2.8%.
In a statement following the end of two weeks of virtual meetings with South African authorities, the lender warned that a return of nationwide power outages by debt-laden state utility Eskom will put further pressure on growth and finances. public.
“Recurring power outages in the midst of a deep recession underscore the need for bold action to redefine Eskom’s business model so that it becomes self-sufficient,” the IMF said.
“To contain large fiscal deficits and debt it will be necessary to contain the public wage bill and avoid subsidies and ill-targeted transfers to inefficient state-owned enterprises.” (Reported by Mfuneko Toyana Editing by Tanisha Heiberg)